Formed with a humanitarian intent around a mission, a big issue, or a great opportunity, nonprofits and philanthropic organizations are noble causes. However, many fall along the wayside and fail due to them being unable to overcome many of their challenges. Limited funding and the pressure to show results and scale their impact are just two of the most common problems nonprofits face, both of which can be remedied with the right infrastructure. On today’s podcast, Douglas Nelson brings on A. Nicole Campbell, the Founder and CEO of Build Up Advisory Group, a firm that helps brave philanthropies and nonprofits scale their impact by strengthening their grant-making and organizational structuring. Nicole explains the role of infrastructure in holding an organization’s vision and mission up and in allowing that organization to advance and support its charitable mission, goals, and priorities.
Listen to the podcast here:
Build Up Advisory Group With A. Nicole Campbell
Our guest on the show is A. Nicole Campbell. She is the CEO of Build Up Advisory Group in Westport, Connecticut, and advisor and a former legal advisor to two of the world’s most prominent philanthropists. Welcome.
Thank you so much, Doug. I’m excited to be having this conversation with you.
I’ve been looking forward to it as well. I wanted to get you on the show to discuss your work with advising donors and donor families to have a greater impact with their giving. You’re a lawyer by training. How did you find your way into the field of philanthropy?
I stumbled into philanthropy. I started out my legal career clerking for a federal judge and then moved from that position, which was intellectually stimulating. It’s challenging on many levels and made me comfortable with the judicial process. Before that, I had read about it through books or seen it on TV. I was able to be a part of it. That inspired me to continue being the best lawyer I could be and seeking out challenging intellectual opportunities.
After that clerkship, I became a tax associate at a firm in New York City. I thought that was it. I was going to step into the private equity world and do private equity deals and M&A deals, and that would be it. Early on in that career, I was given the opportunity to work on a merger deal between two nonprofit organizations and I fell in love with the work. I found it to be intellectually stimulating and challenging. It felt good to know that each day I was able to touch different communities around the globe in many instances and impact many people and causes.
I started to get curious about what was happening to bring executive directors, CEOs, and general counsel from nonprofit organizations and philanthropies to the firm and ask for advice and counsel. That’s when I thought, “I would love to go in-house and see what it would be like to work within one of these organizations.” I went over to the community trust, which is essentially a community foundation, and that’s when I stepped into philanthropy. I was also part of the nonprofit world, living in that hybrid, which is reflective of the work that I do working with both fundraising nonprofits as well as grantmaking philanthropies and foundations.
I stepped into that world and realized I was bringing a lot of the legal skills that I had learned the legal experience. I was becoming a part of the team. I was learning the organization’s appetite for risk. I was learning more about philanthropy in the sector. I enjoyed the work. I decided I wanted to continue to do this. I wanted to learn more about philanthropy. I wanted to do it on a global scale. I was able to then leave my secondment and go to the Open Society Foundations where I spent several years and was the Deputy General Counsel and Secretary of the Open Society Foundations for several of their entities. In that role, I fell into philanthropy on a global scale. I worked with foundations all around the world. I helped to structure grantmaking transactions to make sure that we were getting often complex funding awards to organizations and individuals around the globe.
I was also able to work on governance questions that came up with the different entities within the Open Society Foundations. There were about 42 when I was there. They were in different regions around the world, which had different jurisdictional requirements, legal requirements, and compliance requirements. It was exciting. I love being able to help them think through governance questions, think through structuring questions, how would they set up their entities, set up their grant awards or funding awards, and be a part of that entire conversation. I focused on programmatic strategy, operations, compliance, and legal guidelines to make sure that it was all happening with integrity. I kept doing that work and fully realized that I enjoyed the philanthropic sector.
I love working with nonprofits as well. I was loving this operation space that was surfacing. How are we helping organizations? At that point, there were programs within the foundations. They were spinning off and they needed help. They needed setup help and assistance. They needed to understand how to form their boards, guidance their operations, all of those pieces that you need as a startup. They were social impact startups. I started to work with that program as well and enjoyed it, and took all of that experience and knowledge and moved over to the Dalio Philanthropies where I was that hybrid role of Senior Director of Operations as well as their General Counsel. I’ve been doing this work for more than 15 years in different capacities. At the core of it has been this focus on infrastructure and legal compliance. How do those two things work together to make sure that the programmatic strategy that is in place is able to work effectively? We have the best foundation so that nonprofits and philanthropies can do their best work.
I want to get in deep on the conversation about infrastructure because I love your take on it. Before we get there, you said something about understanding the appetite for risk in the not-for-profit sector. Say a little bit more about what that learning was and how you managed to find the difference between the private equity work you were doing and the not-for-profit sector. I assume there’s quite a difference in the types of risk and the comfort level with it.
Risk is a subject on which I spend a lot of time thinking and writing about it, as well as working with leaders within nonprofits and philanthropy so that we can have it translated nicely into the policies that an organization has and the practices that it follows. What I learned or have learned about risk in the sector is that there isn’t a shared definition among the different organizations and leaders within those organizations, sometimes, within the sector. What that translates to is that you are going on an organization by organization basis to understand that particular organizations’ appetite for risk. Sometimes you are going field by field to say, “In this field, we see risk this particular way. In that field, we see another.”
Given the time that we’re in, risk can mask a lot of our implicit bias that we bring to a situation to a conversation to a transaction. When we don’t know something, we’re not familiar with it, we don’t trust it, that’s when our risk barometer goes up, that’s when our risk antenna goes up. We start to think about what’s risky and what’s not. We rely on what we do know and what we’re comfortable with to say, “This is what less risky looks like.” The things that we don’t know, “That’s what risky looks like.” That can then translate into the way you pick, vet, and evaluate your grantees or your partners for different funding awards or partnerships.
What I’ve learned from all of this is that we have to start with understanding, what do we mean by risk? When we say, “Something is risky,” does that organization have a basic understanding of what risk means? How we are approaching risk, generally, as an organization and as a leadership? Are we able to manage it in such a way that we’re not running from it? We’re embracing it. We’re bringing it in. We’re seeing how we can innovate as a result of this risk. It’s a concept that I call risk leadership.
It’s more than managing risk and saying, “This could happen. We don’t want it to happen.” That’s what we’re considering risky to say, “Instead, this is something that could materialize. If it does, here’s how we will account for that. Here’s how we will build it into our grantmaking. Here’s how we’ll build it into our partnerships.” You don’t run from the unknown. You don’t run from things that you don’t quite understand and label it risky, but you step closer towards it and see how you can embrace that risk to create and sustain innovation.
[bctt tweet=”Risk can mask a lot of our implicit bias that we bring to a situation, conversation, or transaction.” username=””]
It must be fascinating. A lot of the conversations you’re having with organizations, if you look at their mission and their vision statements, it’s about system change, global change, fundamentally altering the way things work in a given community or a place in the globe, and this risk of, “That’s different. We can’t do it.” Helping bridge that gap between the ambition of the mission and that comfort level with risk must be a rich vein of conversation.
It is not something that an organization can solve overnight. You start these conversations thinking, “How far apart could we be?” You start to have an honest conversation about risk. You ask people, “Is this type of organization risky? Why?” If they think it is risky, you will see that the answers that come out are based on their own experiences. Often, it’s based on what they have become used to and comfortable with and the things that they don’t know or are uncomfortable with.
Within those conversations, it is important that we challenge each other, that we are open and honest and we say, “Look at our portfolio, how has it innovated over the past years? How has it changed? Who are we funding? Why do all of the leaders do this particular thing? Why do all the leaders look a certain way, if that’s the case?” Having those honest conversations and the space to do it is incredibly important. This conversation about risk is not a one-time conversation. It’s not easy. It’s something that we all have to work at.
Here at The Discovery Group, when board members use risks sometimes, it means, “I’m not comfortable with this. I’m not sure I understand what’s involved in making this decision.” The other flag that sometimes gets put up is when they say, “Our fiduciary responsibility,” which means, “I’m uncomfortable. I’m not ready to make a decision.” When working with the organizations that you support, are you coming with a set definition of risk that you’re bringing them to? Is it acceptable for every organization to have its own definition of risk?
At Build Up Advisory Group, the way we approach risk is that we don’t have a definition that we bring to an organization and say, “You must adopt this.” Instead, we allow the organization to have those challenging internal conversations to arrive at a risk profile that makes sense for the organization and their work. I will say, though, that one of the requirements or one of the prerequisites to work with Build Up Advisory Group is that you have to be a great organization or brave individual if you’re trying to be a philanthropist.
What that means for us is that you are coming to this conversation willing to be challenged, willing to do things that are different from what you have been doing and you are willing to show up differently to do that publicly and to change the way you’ve been working. Those things are hard and challenging to do. We require that any organization or individual that works with us. We don’t come with that set definition of risk, but we do have a requirement that all of the organizations and individuals that we end up working with be brave. That then allows them to find the appropriate risk profile that fits their work and their partnerships.
I like that concept of being willing to be brave or being brave at the outset. The important change that philanthropy can make and seeks to make in the world requires that level of bravery. Speaking of bravery, this is how I want to pivot into the discussion of infrastructure. You unabashedly talk about the need to invest in infrastructure and spend on making the organization strong. In the face of the scrutiny of the sector sometimes through a cult of efficiency, we can’t spend on the organizations, we have to make do with what we can and shoestring budgets. All of your messaging is about investing in what’s going to make the philanthropy, the activity robust and sustainable. Let’s start this out by saying, what is your definition of infrastructure when it comes to the not-for-profit sector?
When I say the word infrastructure, I’m talking about the framework that is holding an organization’s vision and mission up and is allowing that organization to advance and support its charitable mission, its goals, and priorities. We’re talking about the organizational foundation that allows the organization, the nonprofit, the philanthropy to do its best work. We put it into three big buckets of work. The first bucket is governance. When I talk about the governance component of infrastructure, I’m focused on what I call the people and the papers. The people being the board members. Do you have the right people in the right seats? Are they engaged? Do you have a process for bringing them on board and making sure that they stay on board and are able to provide the necessary level of oversight that organization needs?
The papers, when is the last time you looked at your governing documents? Your bylaws. Your certificate of incorporation. Your resolutions. Do those pieces of paper accurately reflect the reality in which the organization finds itself and where the organization would like to go? Do those papers allow the organization to move forward in that way? We spend a lot of time thinking about, “How can we set up this governance structure in such a way that it provides that necessary level of fiduciary oversight over the organization’s operations and activities that you need?”
The second big bucket of infrastructure work is grantmaking. The majority of the organizations or nonprofits and foundations that I work with are grantmakers. They are trying to find ways to get funding to organizations and individuals around the world. Sometimes, these funding awards are complex. They’re into regions of the world or countries where they are complex regimes or they might be under sanctions. We have to find ways to get this funding out effectively and efficiently. We talk through the decision-making points within that process. Where should they show up? Who should the decision-makers be? How can we structure these awards in the most appropriate way, the most effective way, and the most innovative way such that the organizations’ values are showing up within its grantmaking process?
The last bucket is structuring. When I say structuring, I’m thinking about the external and internal structure itself. Externally, do you have the right vehicle to do your work? Are you in the right vehicle? In the United States, you have the 501(c)(3) charitable vehicle, for example. Should you also be a social welfare organization or a 501(c)(4) if you wanted to engage in more lobbying, for example? We’re thinking about other vehicles that you can set up or partner with or form a formal partnership with that could help you do your work. We then look internally. What are the systems, the policies, the processes that we need to set up to ensure that you have the right foundation to do your work? When I think about infrastructure, I think about those three big buckets that comprise it, governance, grantmaking, and structuring. Ultimately, those three buckets of work make up the foundation from where an organization can do its best work.
When you described those three areas, it seems obvious. How often are you encountering organizations that have skipped 1 or 2 or all 3 of those steps?
I encounter organizations in that situation quite often. The reason is that unless you’ve gone through a crisis and you have seen when something has gone wrong. If something is going right, you don’t necessarily think about your infrastructure. You don’t think about the foundation you need to do your best work, because you’re saying, “We’re doing our best work. We’re delivering on our programs. We’re delivering on our mission. Why would we take a look at our bylaws? Why would we think about the way our team is set up?”
What I found is the CEOs and executive directors that come to me and that I have conversations about infrastructure and we work together, they have seen a crisis. They may not have been within that organization that experienced a crisis, but they have seen another organization go through a crisis. They have been privy to what that organization could have done or they went through the previous crisis themselves. They have been convinced of the role of infrastructure.
[bctt tweet=”COVID has exacerbated the cracks that exist within an organization’s infrastructure.” username=””]
What COVID has done is it has exacerbated the cracks that exist within an organization’s infrastructure. It has made it clear where you need help within your infrastructure. It might be at the governance level or we don’t think our board is as engaged as we would like the board to be. In grantmaking, it’s taking us a long time to get grants or funding out the door, and wanting to engage in a little more advocacy, but we’re realizing that the structure that we have is insufficient. We don’t have the capacity to do it.
COVID has given a lot of these organizations that were ignoring their infrastructure the ability to say, “I want to talk about governance. I want to talk about infrastructure.” I’ve had a lot of organizations come to us and say, explicitly, “I want to focus on my infrastructure.” We have an infrastructure assessment where we assess the strength of an organization’s infrastructure. That service has grown a ton since COVID because of the ability of the CEOs and executive directors to say, “We need help with our infrastructure.”
It’s fascinating that many of our clients or most of our clients are on the operating charity social profit side of the sector. We’ve had a number of them step forward and say, “We realized what’s holding us back as a result of COVID.” It’s often not COVID or a reduction in revenue as a result of that. It’s something that was already in their organization and already in the infrastructure that was holding them back, but they didn’t notice it because everything else was going well. With this abrupt change in the world, those pieces of infrastructure that weren’t there are causing a lot more problems.
I completely agree with that. COVID didn’t cause your lack of diversification of revenue. It’s showing you that your revenue sources need to be more diverse. You need to rely on funding from lots of different sources as opposed to one. COVID didn’t do this. It showed you where the cracks were in your infrastructure.
For the organizations that realize that they’ve seen those cracks, the people you’re working with require bravery. Once the tide has gone out and you see they’re not wearing any clothes, they realize they’re not dressed, how often are they willing to do all of the work? Do you encounter organizations that want to do whatever they need to not have to pay attention to this anymore and get back to the way things used to be?
The organizations that I end up working with, the people that I end up working with, they take it seriously and they’re all in. I have conversations, discovery calls, and we try to figure it out. Is there an infrastructure issue? Is it an urgent issue? Is it something that we should work on together? From those conversations, I talk about the way I work. I am helping to guide this process. I have the experience within the sector to understand when infrastructure needs support and how it can be strengthened. They have specific knowledge about their organization. They know where they want to go. They have the brave vision and the brave mission.
If they’re not willing to do the work to get there, I’m not able to take on that portion of the work for them. I’m not going to do it as well. Early on, they decide that they want to take ownership of a large part of the process and they want to be involved. They’re engaged. What I get a lot is that leaders will say, “I never knew this. Where were you five years ago? I needed to hear this a couple of years ago.” They’re engaged and focused on what they can do and what their teams can do to help the infrastructure strengthening process.
In my experience, what I have said to clients is, “I can help you do this, but I can’t want this for you. You have to want this for you and then I can help you do it or we can help you do it.” It’s great to see that you’re able to identify with people who want to get the job done. One of the things that we have discussed in the past is that so much of this work is helping good and often potentially exceptional organizations get out of their own way. There are things in their governance, in their infrastructure, in their structuring that prevent them from being the organization that they could be having that impact on their mission, vision, and values that they seek. When you’re working with philanthropists who have these big ideas and world-changing ideas, how often are you helping them get out of their own way in order to let the good work get done?
When people have a brave vision and a brave mission or an idea of those things and they’re thinking about changing the world, sometimes it is difficult to say, “Let’s slow down.” Instead, what I try to do with my clients or prospective clients is I want to understand more about that vision and that mission. I want to hear their passion. I want to hear the things that are fueling their vision and their mission. Once I hear that, I then start to step into the conversation with the infrastructure lens and start to ask questions, “Why now? Is there another organization out there that’s doing the work that you’re doing? If so, what would you be doing differently? Could you partner with them?” A lot of those questions I don’t get asked at that stage, I’m pushing my clients to think about.
What I don’t want is to get another charitable organization or another social welfare organization being formed, when in fact, there’s another organization that’s doing great work that could use the support, the partnership, or the funding. A large part of our conversations, particularly and initially, is getting them comfortable with the fact that there are others that can share their vision. There are ways in which they can partner to make sure that vision comes true. A lot of my time is spent helping them think about what is the best next step for them. It doesn’t necessarily have to be, “Let me go form my own organization,” because that comes with a whole host of responsibilities.
For example, I hear a lot, “I want to start a foundation.” Let’s talk about your capacity to do that. Let’s talk about your ability to vet grantees and grant awards. What part of the sector do you want to be most present in? What does your theory of change look like? What would your strategy be? Once we start to ask those questions, many people realize, “You’re talking about an actual organization here. I didn’t necessarily sign up for that part. I signed up for the vision and the mission part and try to support a cause or an issue that is near and dear to my heart.” A lot of the conversations I have and the work that I do with my clients is making sure that we can keep that vision and mission at the forefront. Also, think about different vehicles in which we can house that vision and mission and it could be their own organization. It could also be partnering with another organization or contributing to an organization that shares that same vision and has a similar mission.
From your perspective, what could those charities that might receive that gift rather than having a philanthropist establish their own foundation so she has an idea of what she wants to do to change the world? There’s an organization down the street or across the world that is doing similar work. What gets in the way of the individual who’s thinking of starting a foundation from saying, “I see this other organization and I’m going to support that rather than start my own.” What holds people back from doing that?
A lot of times, it’s about the ability to control. I don’t mean that in a negative way. I mean that in a way of, “I have a particular vision. I know how I would like to go about achieving that vision. I have goals. I can think about goals and priorities I’d like to set and I want to control that. I want the ability to pick and choose and not be subject to other organizations’ or another individual’s ideas or strategies.” At the core of it, it’s the ability to say, “This is my way of doing things.” That pull can be strong. You then say, “Here’s an alternative.” You can provide funding to an organization. At the end of the day, once you provide the funding to them, you can have a grant agreement or a gift agreement with that organization to say, “Here’s how the funds should be expended. Here’s the kind of outcomes you’d like to see.” It’s in their hands. It’s that relinquishing of control that worries a lot of donors or a lot of people who are thinking about, “Should I start my own organization? Should I provide funding to an organization that already exists?”
What advice would you give to the CEO or the board chair of an organization that already exists that’s speaking with a philanthropist who’s considering starting their own entity?
[bctt tweet=”No one organization does everything.” username=””]
One of the first pieces of advice I would give is that you have to listen. What I’ve seen a lot is organizations are doing amazing work. The CEOs know the organizations are doing amazing work. They start to have these conversations with the potential donor or that individual and they’re talking about the great things that the organization can do. They are doing great things. What is missing from that dialogue or that conversation is a huge amount of listening. Listening to the goals of that individual, their vision, their mission, and what they would like to see happen and then taking that information and saying, “Here’s where we are aligned if you, in fact, are aligned. Here’s how we’re going to innovate within that particular strategy.”
You can only get to that second piece of, “Here’s how we’re going to innovate within that strategy,” if you understand where they want to go in the first place. You can only get there by listening. A large part of that initial conversation or that initial series of conversations is going to be about listening to that individual’s needs and what they want to see, what they would like to do with their funding. The second piece of that is then to think about risk. Get an understanding from that individual on what they see as risky. We’ve talked about this idea of risk, this concept of risk that is ill-defined throughout the sector. How do you know, going into that conversation, you have a shared understanding of risk and appreciation of risk and the same risk profile?
Understanding from that individual, how do you see or define risk? What do you think is risky within this context? If those two things don’t line up, regardless of the size of the funding, you may not be a good candidate to receive that funding. You should want to be because of your risk profiles, your risk appetites are not the same. It’s not going to be a good menu for both parties, the organization or the individual, and likely not for the community that you’re serving. You want to make sure that you have a clear understanding of that individual’s idea and definition of risk and understand how they’re approaching risk management and risk leadership.
It’s incumbent on the receiving organization or recipient organization in our scenario here to know their own definition of risk and to have done that work themselves so that they have a firm ground on which to stand to have that conversation. If they haven’t done that work, they’re unlikely to be compelling to that donor, but also to get themselves lost in a conversation like this.
You can only have that conversation when you, yourself, have an understanding of risk or are at least going to have an internal conversation after that conversation with the individual to make sure that you’re all on the same page when it comes to risk.
The third piece of advice?
The third piece would be around showing your place within that ecosystem. What I always say to nonprofits and philanthropies, and all of the leaders I work with say this as well, “No one organization does everything.” What you do instead is you work in partnership with other organizations and individuals, and companies within a particular ecosystem to support a particular mission or to advance a particular vision. What is unique about a lot of charitable organizations is their particular role within that network or within that ecosystem, and that is something that is built up over time. It is reputational. It is about impact. That’s something that individual cannot bring out, at least at that instance, to the conversation or to the results that they would like to see.
To have that ability to talk about your unique role within the ecosystem and the capacity that you are bringing within that role is immense. A single person who’s thinking about starting a foundation, their own charity, or your own charitable organization, what often lack is capacity. They don’t have the people on board. They don’t have the systems, the processes, all those other things. They haven’t built up that unique role within the ecosystem. As an organization, you can point out, “This is my unique role. This is the capacity that I’m bringing in order to push forward this particular mission or goal.” That’s something unique that I think that individuals will be able to respond to.
That’s good advice. It shows how much work is involved in being brave on both sides of that equation and how important it is. If you’ve got your eyes set on the horizon and what you want to achieve, you need to start with your feet firmly planted in the ground and knowing where your organization sits in the ecosystem, what your definition of risk is, and what you have to offer to donors who are seeking transformational change. As we come to the end of our conversation and I could ask you questions all day long, what are you most optimistic about in the fall of 2020 when we think about the entire social profit sector?
I am optimistic about grassroots organizations becoming the next big bets within the sector. I am focused on philanthropies and nonprofit organizations working together to support grassroots community-based organizations that are often closest to the marginalized and vulnerable communities that we’re trying to serve and are able to problem-solve with them and alongside them. Being able to fund these grassroots organizations and give them the space to experiment, fail, and innovate. To be able to hold themselves accountable for making progress within that space of experimentation and innovation is something that I’m excited about. It’s something that I work with lots of organizations and leaders to make happen because I would love to see at least 100 grassroots organizations become big bettable organizations by 2025.
That is bravery in and of itself and a great thing to think about and something to pay attention to. Thank you so much for being on the show. I appreciate the conversation.
Thank you so much. It was great talking with you and I look forward to keeping in touch and hearing more about the amazing work that you are doing.