How a Relatively Small Foundation Leverages Resources for Optimal Impact

The following is a conversation between Philip Li, President & CEO of the Robert Sterling Clark Foundation, and Denver Frederick, the Host of The Business of Giving.

Editor's Note: Our Phil Li was recently interviewed by Denver Frederick for his Business of Giving podcast, where they talk about Phil's career in the sector, how our foundation maximizes impact, and trust-based philanthropy. The transcript of their conversation appears below. You can also read it and hear the podcast here.

Denver: Since 1952, the Robert Sterling Clark Foundation has been committed to helping create a vibrant New York City — one that is strong, healthy, livable, and just. It is also one of the leading adherents of a concept called trust-based philanthropy. And here to discuss that with us, as well as how it is responding to this period of unparalleled disruption, is Philip Li, the president and CEO of the Robert Sterling Clark Foundation.

Welcome to The Business of Giving, Phil! 

Philip: It’s a pleasure to be here, Denver. Thanks for having me. 

Denver: My pleasure. Give us a snapshot, Phil, of the foundation, and also a little bit about its history. 

Philip: The work of the foundation today is really investing in the people of New York City, the people who are making change happen. And so, the way that we do that is through investing in organizations that run leadership development programs. The whole idea is that the folks who go through these programs are able to bring what they’ve learned and what they’re taking back with them and the relationship, so that they can go in and do better work with their organizations to serve the communities and the people that they’re designed to do the work for. 

The foundation itself, Robert Sterling Clark and his wife, Francine, were members of a family that worked with the Singer sewing machine legacy. And so, the resources that we have are from that, and so if you’ve ever used a Singer sewing machine or seen one, we thank you. But the work and the commitment of the family has largely been here in New York City, and so that’s where our work is focused today. 

Denver: It’s interesting you said that because I was wondering how a relatively small foundation such as yours, how you tried to leverage your influence and your dollars in a relatively large city like New York, and is leadership the way you do that? 

Philip: For us, leadership is. To your point, in a city where there are so many prominent foundations doing amazing work across the city, our board and our trustees were thinking about what’s a way that we can contribute to the life of the city. And it turns out, only about 1% of philanthropic dollars are earmarked for the people who actually do the work. And so–

Denver: Wow! That’s amazing.

Philip: Yes. So, for us, that’s a way that we could do that work and really invest in the people who are trying to make a difference here in New York. 

Denver: Tell us a little bit about the Sterling Network.

Philip: The Sterling Network is a program and an initiative that we run ourselves at the foundation. It’s really trying to build on the notion of people who’ve gone through leadership development programs, or people who have had the opportunity to take ideas and bring them back to their own organizations.  But what if you actually had a chance to work with others who are committed in many different areas and in lots of different issues in the public, the private, and the nonprofit sector? And we’re looking to make change happen. And so often there’s not the time or the resources to actually explore that. 

And so, the Sterling Network brings together about 50 people from those different areas working on a variety of issues. And for us, they’re looking at economic mobility or economic justice here in New York City. And so, we are three years into that endeavor with lots of different experiments happening to see what we can do to perhaps change the arc of what’s happening here in New York.

Denver: Wow! That’s great. 

Talking about changing the arc, and I know it may be a little early in the game to have a feel of this, but do you see the nature of leadership changing as a result of this pandemic? 

Philip: I think what it’s doing, it’s lifting up or highlighting things that were already there but that are much more prominent now. And so, I think what you’re seeing is that there’s more focus on leadership development, but also really looking at where the opportunities are. 

And so, really focused on people with lived experience and what they bring to the table, and how they can understand and really enlighten and share what they’ve gone through as part of that journey, but also really lifting up the BIPoC leaders, the Black, indigenous, and people of color, and really focusing on that. 

And if there’s anything for us, that’s really kind of sharpening our own lens around leadership development, really with an equity lens. 

Trust-based philanthropy is an approach, and it really is entrusting a lot of the power and control dynamics that are inherent in philanthropy.

The real design in that is that it’s our job to get to know the organizations. It’s not their job to prove themselves to us. But the reality is also that we want the organizations that we partner with to really be able to focus on their work and not on us as the funder. 

Denver: I mentioned in the opening that the foundation is one of the leading adherents of trust-based philanthropy. Tell us what that is and how it works.

Philip: So trust-based philanthropy is an approach, and it really is entrusting a lot of the power and control dynamics that are inherent in philanthropy. What it does is it actually sort of says that: We believe and trust our partners. They know better than we, and how to deploy the resources to serve their communities or to make change happen in the work that they’re trying to do.

And so, by and large, many of the facets are really revolving around. multi-year, unrestricted financial support. And so, it gives them flexibility to make those determinations to do the work and to make things happen. And for us, it’s also a streamlined process in terms of grant applications and grant reporting.

The real design in that is that it’s our job to get to know the organizations. It’s not their job to prove themselves to us. But the reality is also that we want the organizations that we partner with to really be able to focus on their work and not on us as the funder. 

Denver: Good description. So, Phil, how does a guy who spent a fair amount of his career on Wall Street come to embrace trust-based philanthropy?

Philip: That’s a good question. So, a lot of the ways that philanthropy works right now are driven by perhaps influences from the financial services sector in terms of metrics and ways to do that. 

But I would say that working on Wall Street and working in finance actually has helped inform the way that we look at trust-based philanthropy or the way that we do our work at the foundation, whether it was making loans or whether it was rating bonds. it’s really a holistic look at an institution and looking at the strategy, the management team, the resources at its disposal, and whether we think they can execute what they’re saying that they want to do. 

And I think in many ways, that’s the same lens that trust-based uses in terms of looking at an organization and saying, “Hey, here’s this group that wants to do this work. Do we think they can do it?” The whole idea is that if we do trust them and believe that they can do it, then here are the resources to empower them and let them take advantage of the opportunity to do the work that they want to do. 

Denver: We do some pretty nutty things in this sector, I guess. It’s almost like going to send a FedEx package, and when you pay the guy 35 bucks, you say, “I don’t want any of this to go to gasoline whether it would be in your trucks or whether it be in your planes, and certainly I don’t want any of it going to you because you’re nothing but overhead.” So, there are certain things that in the non-profit sector, we kind of accept. 

You probably have a little bit of an advantage coming to the sector a little bit later in your career because you do have a fresh lens, and you may see some things that you wonder about and say, “Why do they do it that way? There’s a more effective way.” Any other things pop to mind in terms of that that you question? 

Philip: So, when I first came to the sector, I actually ran a nonprofit here in the city, and so it was being on the flip side, which was being a grant seeker. And I think working with funders from that point of view — writing grant applications, and then going through kind of a lot of obstacles and hurdles, honestly, to go through that and often being told no at the end — was really enlightening for me, just in understanding what does it mean to go through this process… and what does it mean to do that.

So the background in finance, and then also the background working in nonprofit has helped inform the way that we do our work as an institution in terms of really trying to understand what some of those challenges are when you’re trying to do the work, but also trying to find and secure the resources to do it.

One of the interesting ways that we’re doing it is if you’re working around trust and trust-based philanthropy, it’s trust for impact but also trust for action, and not trust for friendship or likeability. 

Denver: And not having nonprofits fill out these reports and things of that nature to the extent that other organizations or foundations do, how do you go about measuring impact? 

Philip: It’s a great question. We do it in a number of different ways. We use, actually, a verbal reporting system called a CHAT, which is the Check-in Analysis Tool. It’s a series of questions that try to understand what the impact of getting unrestricted most of your funding does for an organization in terms of its flexibility in doing that work. 

But also if you really go back to the core, where you’re honoring the knowledge and expertise that’s resident within the nonprofit, we ask them actually how they look at themselves and how do they assess themselves … how do they report back to their board; how do they report to their community in terms of the work that they’re trying to do as well.

And so just maybe to break down one of the myths, it’s like if you’re trying to look at assessment and look at impact as well, maybe you’re looking at things that are perhaps non-traditional becomes an interesting way to do it. And so, one of the interesting ways that we’re doing it is if you’re working around trust and trust-based philanthropy, it’s trust for impact but also trust for action, and not trust for friendship or likeability. 

But the whole idea is that we measure something, or we look at it and call it “return on relationship.” How are we as funders doing? A lot of our own evaluation, honestly, is evaluating ourselves. Like if we do a lot of the vetting, and we learn about the organizations and decide that we want to partner with them and make the investment, then for us, each year is actually a portfolio assessment of ourselves, like: How did we do as an institution, and not the individual organizations that we support.

Denver: One last question about trust-based philanthropy. Do you see it picking up here a little bit, in being adopted? Because we’ve heard so many foundations, particularly in the wake of the pandemic, it’s going to be unrestricted, it’s not going to be tied to a program; maybe multi-year, things of that nature. Everybody is sort of saying, “Well, is this just a one-off for this time, or is it going to continue? How do you see the whole trust-based philanthropy movement proceeding forward? 

Philip: I don’t know if I call it a silver lining, but one of the things that happened as a result of the pandemic, there was this COVID-19 pledge that’s been signed by about 800 foundations nationally and a few around the world, which basically has embraced a lot of the tenets or the beliefs that are inherent in trust-based philanthropy, which is really, as you were saying, converting a lot of program or restricted grants into unrestricted, doing multi-year, streamlining processes, and things of that nature. 

I think that’s the opportunity. You have a whole slew of foundations that are, if you will, experimenting with this or applying this in this particular way. I think the opportunity is now that they’re doing it this way, is there a way to translate a short-term commitment to this time to become permanent? And I think that’s really where that’s at. 

A lot of us who work on the Trust-Based Philanthropy Project, the group that stands behind this work, we’ve gotten a lot of inquiries, and we’ve talked to a lot of different groups of foundations that are interested in seeing how to apply this, and also trying to navigate some of the challenges that are inherent in there. And so, I think this is an interesting moment for trust-based in terms of seeing many groups that are sort of embarked in the same experiment at the same time and trying to see whether it will hold. 

Denver: Time will tell. Nobody can predict anything. We’ll find out. I’m sure it will to a certain degree but, hopefully, to an even greater extent. 

Getting back to the impact, the foundation is relatively new to the impact investing space. Tell us about that journey so far, maybe any early insights that you have that would be helpful to other institutions that are contemplating going down that same road.

Philip: I think one of the things that got lifted up for us over this past year is that we and many other foundations increased our payout, and we’re able to provide additional resources to our grantees. But I think also lurking there has always been the question of: What do you do with the other “95%” as it’s often called? 

And I think we are just beginning that journey in terms of understanding:  What does it mean to mobilize the other resources, the assets that we have at our disposal to make change happen? And so, we have talked to a number of our colleagues and looked at different resources within the field to just better understand what’s going on.

And I think we’re taking some of the early steps right now where we have our own committee thinking about that. But I think some of the easiest steps that we’re taking really are looking at our investment policy statement and revising it so that we can incorporate that, and do that, and consult with our advisors on that. And also start thinking about different ways that we can do — I’ll call them the “low hanging fruit” or some of the things that are probably more readily doable quickly. 

And maybe just a couple of examples is that often when you have other additional cash at your disposal, where do you keep that on deposit? And so, we’re looking at Black-led and Black-serving organizations and moving some of that cash there, but also looking at places where we can do work with financial institutions and either provide things like credit enhancement or loan guarantees. So, if a nonprofit were to take out a loan or something like that, we could actually be the backstop, if you will, or the support beyond that in case something should happen to them.

But we’re also looking at other ways to work with CDFIs, community development financial institutions, and looking at either program-related investments or other things down the road. But we’re trying to take some early steps right now just to dip our toe in and get all of us, board and staff, more familiar in the work, and go from there.

Denver: Well, those are good steps because they’re not talk, they’re action. Even though you say they’re not big actions, they’re actions. 

I’m always looking at the Say/Do ratio that’s going on in the sector right now. And picking up on that, every foundation says they are looking to achieve racial equity. But in your opinion, in addition to a couple of things, the examples you’ve given, what do they need to do? And how do they have to change the way they work in order to really accomplish this?

Philip: I think all of our own understandings around racial equity can be different or can be interpreted in different ways. And I think really the big thing is really those kinds of to center race equity or racial equity in the way that we think about our work. 

If we look at COVID and what’s happened and understanding that there’s a disproportionate impact on communities of color, and just understanding this is what’s happened. Or looking at what happened with George Floyd and seeing how people who are Black suffer and have different experiences with the criminal justice system. And so, I think part of it is just all of us understanding in a different way that there are really significant differences in experiences that people have as a result of being of different races. 

And so really getting us to have those conversations, which can often be tough, and often it really is like…it’s almost lifting our own blinders off about what we understand and what we see because we experience the world from our own point of view, and that’s not always representative of what else is out there. And so, I think really having those kinds of conversations, and then really trying to take that and then bring it into the different ways that we’re doing our work. 

So, for us in leadership development, it’s really looking at it like we’re bringing more people in; we’re investing in people who are going to be the new voices, who are going to be leading a lot of the efforts here in the city, but also really being mindful and bringing that notion of what race equity looks like, and whose voices are the ones that are actually being incorporated and lifted up and focused on as part of this work. 

Denver: Many folks who work for nonprofit organizations listen to this program. So let me ask you what advice you might have for them over the next couple of years, not about approaching your foundation per se, but in general. What do they need to keep in mind when they approach a foundation seeking support for their organization or their cause?

Philip: I think in some ways, things haven’t changed, but in some ways they have. I think we have this moment, and just building off of what we were just talking about, looking at racial equity, and looking at bringing other voices and lifting up other experiences, and investing in different ways. Being intentional about investing in BIPoC, and BIPoC-led and BIPoC-serving organizations is part of the way that I think many organizations are, many foundations are looking at right now. 

I think as you see more foundations thinking about what is increased spending look like or, what increased investment looks like across the board, that may open the doors for different kinds of ways for foundations to support additional organizations. I think, often, philanthropy is viewed as supporting groups that have already proven themselves, and this moment is a real invitation to think differently. And so, I think you’re seeing more philanthropy thinking about movements and untraditional ways or organizations formations to support and to find ways to support things that are more grassroots in nature. And I think we’ll see more of that as time goes on. 

Denver: That’s really interesting. And it kind of aligns with trust-based philanthropy because some of these organizations might not have the track record and all the things that normally would be required in an application. But if you connect with them, and you see what they’re doing, and you trust them, you are going to be able to enter that space which maybe with the old standards, you weren’t before.

Philip: I think you may see more, and I will just call it boldness or more just like looking at interesting organizations and saying “Hey. Here’s this really interesting opportunity. Let’s go for it. And let’s invest in that way.” 

I look at philanthropy as kind of the risk capital of the sector. Philanthropic dollars can go where government dollars can’t and shouldn’t, and often where corporate dollars don’t. And so, if we’re the place where people can experiment or do things that are bold or different or perceived as risky, then so be it.

Denver: I was talking to somebody the other day about that. And I said, “What if one of them turns out to go belly up or not be a good organization?” It’s a little bit like stocks. You’re looking for somebody who’s going to make an incredible difference in your portfolio. So this idea of having one failure, if you have a whole bunch of winners, what’s the big deal? So you have to get out of that conservative mindset because you tend to support very staid organizations who might make incremental improvements, but not really dramatic ones. 

Philip: I completely agree with you on that. I look at philanthropy as kind of the risk capital of the sector. Philanthropic dollars can go where government dollars can’t and shouldn’t, and often where corporate dollars don’t. And so, if we’re the place where people can experiment or do things that are bold or different or perceived as risky, then so be it. Like in my own case, I would say that if every grant that we make is wildly successful, then perhaps we haven’t been brave or bold enough. 

Denver: That’s a good motto. You can put that on a coffee cup.

So you’ve been out about a year. We all have been. Just completely out of the office, out of circulation, and things of that sort. What have you done?  What kind of support network have you surrounded yourself with during this time? 

Philip: It’s been an interesting time being kind of all working from home or sheltering-in-place. Definitely do these daily walks that get me out and about and try to get out early. But interestingly, the way to stay connected, I think that there are so many… as my own hair goes gray…  in terms of the way it is.

Denver: Don’t talk to me about that. 

Philip: One of the things that I’ve done or really tried to do is… I’ve actually used Zoom in a different way to reconnect with people from all different places or stages of my life, and that’s been really wonderful.

Denver: Really?

Philip: I had about 20 different reunions, everybody from college to folks that I went to high school with,  I went to Chinese school with — I’m going to actually do one with them next week — to different groups of folks that I’ve worked with in the past, to people I play tennis with. Done virtual book clubs. Our whole staff actually just did a virtual cooking class together over the holidays, and that was great fun. So trying to find different ways to stay connected with different groups of people. 

Denver: Really interesting. 

Finally, Phil, in light of these multiple upheavals we’ve had over the past year, what do you think the foundation will do differently going forward? And do you think there’ll be any changes in the way you run the organization or the way the organization is run? 

Philip: That’s a great question. I think some of it has yet to unfold. I would say I think the way that philanthropy has been working and has done its work for years is actually undoubtedly going to change, and I think that we will be part of that change. I think in some ways we’ve really tried to think about things in a different way… or philanthropy with a twist, if you will, already in terms of using and applying trust-based for the last five years. 

But I think there’s still even more that’s going to happen, and I think part of it will be really thinking about: What does grantmaking look like? Or what is that about? And I think as our own staff is pretty diverse, but thinking about: How do we think about bringing in more voice and others into our decision-making process? And so, I think we’re still trying to think about what that means, and I think we’ll see a lot and learn a lot from our colleagues in the fields. 

Denver: The paradigm hasn’t changed in a long, long time. We tend to nibble around the edges, but you do want to say: What if we came with a completely different starting point, and what would that look like? And that’s hard to do, but it needs to be done. 

Philip: I’m completely with you. I think it’s like: How do we flip it on its head, and what would that look like? And I think that’s the exciting thing. And I think you’re seeing lots of different things. 

Trust-based may be one approach. I don’t know if it’s really flipping it on its head, but it’s sort of like, “Hey, here’s a different way of doing it.” But you have participatory grantmaking. You have other ways — impact, lots of different things that are going on that are inviting philanthropy to think differently. 

…we make boo-boos and we make mistakes, but we’re trying to learn from them. And I think that’s this learning stance that we have as an institution, but it’s also just a way for everybody to understand we’re just as human as everyone else, and we’re not the special people just because we’re working in philanthropy. 

Denver: Every other sector is going to be disrupted, and there’ll be an upheaval. Why should philanthropy be any different? Our time has come, that’s for sure.

For those who want to learn more about the foundation and keep abreast on some of these issues, and I will say you have a very, very interesting blog on your website. I read it all the time. Tell us a little bit about that website. 

Philip: So our website is rsclark.org. And so, you can find more information about the trust-based approach, but also our grant-making and our blog. A little irreverent in some ways, but I think the idea is to humanize us and to show that philanthropy isn’t this thing where we are the all-knowing and the omniscient and the wonderful people and the smartest and brightest whenever. 

So, one of our whole series is a brilliant… It’s called Face Plant, which is like my own term about the stumbles and trips and the mistakes that we’ve made. And we’re really quite public about sharing them because I think the whole idea is everybody else… we make boo-boos and we make mistakes, but we’re trying to learn from them. And I think that’s this learning stance that we have as an institution, but it’s also just a way for everybody to understand we’re just as human as everyone else, and we’re not the special people just because we’re working in philanthropy. 

Denver: Well, the sector could use a little irreverence, so Bravo to you! I want to let you know, Phil, how grateful I am to you for being here today. It was such a pleasure to have you on the show. 

Philip: It’s a pleasure being here, too. And I would be remiss that if you’re interested in trust-based philanthropy, there’s a website as well. And so that’s trustbasedphilanthropy.org, where there are abundant resources for you to look and learn and discover a little bit more about what that approach is all about as well. 

Denver: Fantastic. Thanks, Phil!

Philip: Thank you!