When the first class for single mothers who wanted to become certified nurses launched three years ago at the Eagle Academy, John Annis admits he had some unrealistic expectations. The Community Foundation of Sarasota County’s senior vice president of community investment, he wanted to see the program become an unadulterated success, and could see only one way to achieve that: all 15 mothers enrolled had to complete the program and walk out with certificates in hand and a life changed for the better.

MARK BREWER AS AN ASTRONAUT.

But it wasn’t to be. One day, he got a call from a student. A mother of five was suffering from a cold, the type of bug that inevitably works its way through a household of school-age children, and then she got a flat tire on the way to class. She wasn’t calling in late. She was quitting. Annis worried his whole program would now be in jeopardy. He called up the board members responsible for funding and let them know the program’s inaugural class had lost its first mom. “Oh my God, she’s dead?” a member asked. No, of course not. She was alive, but was leaving the program. “Well you had to expect that, didn’t you?” came the response. The exchange served as an epiphany for Annis. You couldn’t take a program like this, one that demanded results from the underprivileged it attempted to serve, and reasonably expect perfection. No—like any pilot program there would be positive and negative results. Some would be thanks to factors outside the academy’s control, others inevitably resulting in problems with the program itself. And every event to transpire, good or bad, would inevitably provide lessons for the future. Annis realized he now managed risk capital, the type once reserved for business incubators and angel investors. But unlike those entrepreneurs trying to make a better mobile app, Annis attempted to solve society’s woes be leveraging endowment funds. If a web developer should be allowed forgiveness for a design flaw or a failed feature, shouldn’t a program seeking to attain a common good be given the same leeway?

And for the record, the fact that a mother dropped out of the class had no bearing on the reception of the initiative as a success. Alta Vista Elementary’s Eagle Academy continues today, with about 300 parents this fall taking classes in skill programs like nursing as well as general job readiness classes including English as a second language and GED preparation. Parent universities like Eagle Academy now pop up in schools around the region, training mothers on campuses while their children also study literacy or early education. Students delivered a boost in third-grade reading levels from 53 to 73 percent at Alta Vista Elementary after the academy launched. The Community Foundation’s efforts these days earn national accolades for breaking ground in what now gets labeled as a Two Generation (TwoGen) approach. The philanthropy paradigm today has tilted toward risk. Foundations now seek impact from grants, as donors call for innovation in the independent sector. Will this "impact philanthropy" produce earth-shattering, society-redefining improvements? There’s only one way to find out.

Conducting Experiments

On a fundamental level, the success of Eagle Academy also shows what happens when philanthropic leaders are allowed to take chances. Risk capital, once principally the currency of entrepreneurs, exists today in unrestricted funds dedicated to solving problems using innovative solutions. Donors today offer nonprofits and foundations more room to experiment, and foundations encourage those who still want to prescribe how every dollar given gets spent to consider allowing more adaptation to the evolving marketplace. In the words of Central Florida Foundation President Mark Brewer: “It’s not how much money they give you; it’s how they give you the money.”

Brewer spoke about the matter to a Sarasota audience this March at an SRQ Media-sponsored event. He observed then that the state of philanthropy in America continuously evolves, and suggested donors should recognize new ideas that work on different kinds of metrics are the ones winning accolades today. Under the new paradigm, donors and foundations should act as investors in solutions. The judgment of those spending the money, he says, deserves greater acknowledgment and should be the subject of scrutiny. And just as happens with entrepreneurs, nonprofits must be allowed to try new programs even if it means a certain number of those will fail.

It’s a similar mindset Mireya Eavey brings with her to United Way Suncoast, where she took over as president in December 2015. “The model has shifted,” she says. “It used to be money in money out, like an ATM.” Now she’s directing funding instead toward efforts aimed at making a greater impact. “You can’t just keep throwing money into a problem like child services," Eavey says. "You need to have programs.” In many ways, the change in mentality serves as a contemporized retelling of the parable of teaching a man to fish: You can fill all the backpacks in the world with food for school children to take home and eat, but what happens when the backpack empties? Brewer and Eavey say complex problems demand more meaningful solutions.

And so Eavey now wants to see the recipients of United Way grants showing plans for long-term programs. This leads to a certain level of consternation among applying agencies, she notes, but also spurs creative thinking. Now, she directs money toward efforts like a new career awareness center at Booker Middle School, which teaches kids about the preparation needed for skilled labor as an adult. As a result, United Way plays a greater role in business conversations like workforce development, but this also could create a greater solution to chronic poverty in the long-term. The same can be said for financial coaching programs and technical education grants. “It’s transforming a mindset,” Eavey says, “and the agencies are nervous about it if they are used to doing things the old way.”

Perhaps it’s no surprise that the idea of risk capital in philanthropy started in the famously cutting-edge tech sector. The Washington, DC-based Case Foundation was founded in 1997 by AOL Co-Founder Steve Case and wife Jean, the latter of whom now serves as the foundation’s CEO, and today boasts a “fearless approach” to philanthropy. In 1999, the foundation launched PowerUp, a collaboration with high-tech companies that has opened nearly 1,000 computer centers serving underprivileged youth. It also provided $1 million to launch Venture Philanthropy Partners, an effort to help low-income families in the National Capital Region through programs aimed at closing the achievement gap.

The work inspires Gulf Coast leaders like Mark Pritchett, who took over as president of the Gulf Coast Community Foundation (GCCF) last fall. Pritchett tracks successful efforts by foundations across the county to leverage funding into impact. “The field of philanthropy is really changing at a major level,” he says. “You are even seeing for-profits form that are for the good of their communities or regions or the nation and they’re able to access venture pretty quickly, much faster than in the nonprofit world.” And while the private sector notoriously seeks results, it also takes risk in spending and acts nimbly on outcomes. That mindset should inspire nonprofit leaders, Pritchett says.

Since his arrival at GCCF in 2008, then as a senior vice president for the foundation, Pritchett urged donors and board members at his organization to break new ground. Along the way, that meant economic development efforts like the recent Blue Economy initiative, micro-granting programs like Gulf Coast Gives and even a few risks that didn’t pay off like the effort to lure Jackson Labs to town. GCCF also served as a major partner to certain projects, such as guarantor on the loan for Venice Theatre during the economic downturn after a lender went under, something that allowed a job-creating cultural improvement to the region.

Seeking Results

Pritchett also acknowledges that the people with pocketbooks to fund philanthropy don’t always want their gifts to be the least-reliable part of their portfolio. “Our board has a fiduciary responsibility to expect a return on investment with the greater good you will do in a community,” he says. “There is a fulcrum you have to balance a decision on. It’s the greater good you can accomplish versus the risk involved. The whole idea is to mitigate the risk as much as you can and make sure you’ve got the metrics that result in a greater good.”

In Pritchett’s eyes, the concept of impact philanthropy has yet to truly take off here the way it has in communities like Cincinnati, Baton Rouge or Washington, DC. Annis backs that up, recalling how when he shared the story of the nursing program success with an Aspen Institute group, many suggested the local foundation was still acting too risk-averse. And Annis knows that when he grants a substantial amount of funding to a nonprofit, he expects a certain result as well. “I would hate to get a report that says, ‘Thanks for taking a risk on this program, but it failed,’” he says. Yet philanthropic leaders on the Gulf Coast nearly universally suggest that the freedom for nonprofits to try new things and fail will serve a net positive when it comes to achieving the higher goals philanthropists typically have when writing checks and willing endowments.

Take the Patterson Foundation, which came about after a $200-million bequest was willed by the late Dorothy Patterson upon her death in 2008. A year later, a designation committee named Debra Jacobs as president and CEO to manage spending with no stipulations, and in 2010, the foundation announced initiatives in fields as broad as community journalism and aging with dignity. Since then, the Patterson Foundation helped create: EdExplore, an education resource for classrooms; the Ringling College Collaboratory, a program connecting student artists with real world employers for projects; and Bringing Science Home, a tool for assisting people with chronic health conditions like diabetes to live happier, more active lives.

And in addition to reaping the benefits of unburdened funding in its own programming, the Patterson Foundation also works each year to incentivize donors to give unrestricted funds to nonprofits in the region. In what has repeatedly turned out to be the biggest one-day giving event each year in the nation, the Patterson Foundation boosts revenues raised by the Giving Challenge each year by greeting every gift up to $100 per organization with a 2-to-1 match for new donors and a 1-to-1 match for returning donors. Nearly $13.4 million was raised over a 24-hour period in September. For Jacobs, supporting the Challenge means stimulating local charity efforts to come up with fresh campaigns and projects. “This open-ended opportunity really allows and encourages organizations to flex their imaginative planning muscles,” she says. “Not only does this event provide much-needed support for local nonprofits, it also gives them the opportunity to share the impact of their mission through focused communication and donor outreach, resulting in new donors and more revenue to support their missions.”And while impact philanthropy makes results less predictable, the shift toward risk-based nonprofit activity also brings a sort of free market accountability to every project out there. Eavey stresses that with a startup mindset at United Way also comes a demand for thought-out pitches for every grant. “We have to think about how we invest our dollars,” she says, “so they have to show how their programs move the needle.”

Even the call for metrics incites fresh creativity, Brewer says. He spoke to SRQ about a valuable after-school activity program funded in Orlando that measures success based on low teen pregnancy rates and drug arrests. The program has no focus on reducing those things, he says, but achieves the objective of keeping teenagers engaged in other activities instead of generating social problems

Forming Conclusions

Not every experiment produced desired results, and philanthropic leaders warn impact philanthropy also brings a stronger chance of disappointment. Not every partnership coordinated by a local philanthropy will bring about the desired metrics. Pritchett notes, for example, that efforts to promote collaboration between University of South Florida professors and Mote Marine Laboratory scientists in recent years haven’t proven to be as fruitful as hoped. But that doesn’t mean the foundation has quit pushing efforts with Mote, including a reimagining of the Sarasota waterfront that potentially includes space for a new aquarium. The Bayfront 20:20 effort to develop a master plan for a cultural district in Sarasota may not bring about what every partner wants to see—indeed results almost certainly will disappoint some while exciting others—but it’s still worthwhile to be engaged in the process in Pritchett’s eyes. Programs big and small run the risk of disappointment, and few go completely according to plan. Annis actually goes skeptical when he gets a report from a nonprofit suggesting nothing went wrong with the implementation of a grant. “When you say things went exactly as planned, I say, ‘Thanks for writing a piece of fiction for me to read,’” he says.

But even utter disappointments bring lessons for the future. The Community Foundation, for example, set upon a mission two years ago to bring five local families out of poverty in three years or less. It seemed a humble outcome, but not all has gone as planned. At this moment, only two of the five families remain on track. The initiative faced unforeseen obstacles along the way—income that families couldn’t publicly claim without risking benefits, additional family members suddenly have moved in to households, shifting the financial demands on homes—but those challenges will never go unforeseen again. Overall, risk capital should prove to be a net positive for the giving world, and Annis says the trend has been to award less prescriptions with every grant. And while every program involved a little risk, the rewards remain outsized. Right now, Annis is bracing for a sequel program of sorts to the successful nursing certification program that caused him anxiety a few short years ago. A number of certified nurses now years into their career have enrolled in a coming licensed practical nurse course. Four single moms who started at Eagle Academy with no high school diploma see the opportunity now to become working professionals. “It’s a big risk for us, but we are committed to making those four moms get through this,” Annis says. “Those mothers are our shining stars.”