Choosing What NOT To Do

One of the more difficult steps in making sound decisions about how to focus an organization’s programmatic investments for maximum impact is to decide what NOT to do. Early on the Endowment’s Board developed a list of “ineligible” activities to help avoid the trap of “trying to be all-things-to-all-people”—a dilemma that afflicts many non-profits.

Some Things the Endowment Always Says No To
Some of the early “Nope, can’t go there” things were the proverbial no-brainers for a national endowment focused on sustainable forestry: sporting or booster clubs or religious activity. Others were imbedded in our “organic act”: political activity and humanitarian or disaster relief (under the Softwood Lumber Agreement that activity was handed to Habitat for Humanity).

Still others were on the “do not call list” as they would divert from the Endowment’s desire to be “systemic, transformative and sustainable” in the type of change we hoped to promote. Among those were: debt retirement, capital campaigns, annual fund drives and honorary functions. While a significant donation to a single organization’s capital campaign might be transformative to that entity, it isn’t likely that the Endowment could chart an approach that would be “systemic” in such endeavors nor could it be “sustained.”

While not perfect, we’ve found that initial list of things “not to do,” very helpful in focusing our Board and staff time and the organization’s limited financial resources on areas that offer greater potential value and return.

Conferences and Forums
An additional area that we adopted early, but had not put on the “ineligible” list (although we’ve now added it), is the whole arena of conferences and forums. Not surprisingly, we get lots of calls and requests for $5,000 or $50,000 “sponsorship” of some very important conferences. In choosing not to fund this type of activity we are in no way minimizing their value. In fact, our staff pays a registration fee and attends several such meetings every year to expand understanding of current or emerging topics.

There are two primary reasons that we’ve opted not to provide funds for such meetings. First, we don’t believe that it is possible to appropriately measure benefits against our desire to be “systemic, transformative and sustainable.” Secondly, and perhaps just as importantly, given that there are so many worthwhile opportunities to provide conference support, we’ve found that it is far easier to be consistent by not supporting any rather than in trying to explain to others why their conference isn’t going to gain Endowment support if we just funded a similar one somewhere else.

The Importance of Consistency
We know that the need for financial support in the not-for-profit sector is great and growing. We know too that for every time we are able to say yes to someone’s great idea, we at the same time must say no to dozens of other worthwhile projects and initiatives. Finally, we know that we don’t have all of the answers. We welcome ideas and input. In fact we aggressively seek it via open exchanges such as our Blog, through periodic convenings of experts in a given topical area and through reading and listening as we travel across this great country. In all of this we attempt to be transparent and consistent in how we treat everyone. All the while we seek to stay true to our Board’s desire to really move the needle of change. Thus we continue to focus our actions and our resources.

Soliciting the Best of the Nation’s Creative Conservation Thinkers

The Endowment is in the midst of implementing a new program in partnership with the Natural Resources Conservation Service (NRCS) made possible by a new Grants Leveraging Category contained within the agency’s Conservation Innovation Grants Program (CIG). Through a pending Request for Proposals process the Endowment is seeking to identify projects and partners for implementation under the Endowment’s successful 2009 CIG submission entitled, “Healthy Watersheds through Healthy Forests Initiative.”

At this point we don’t know if NRCS will continue the Grants Leveraging Category of CIG going into the future. What we do know is that we found the thought process that led us to the winning 2009 submission -- with the support of input from a number of conservation professionals from across the country -- to be a stimulating way to bubble up important initiatives and priorities. In short, it allowed us to build on our original public input process as the Endowment set its strategic programmatic priorities. We’d like to engage you in continuing that process as we think ahead to 2010.

About CIG
The purpose of CIG is to stimulate the development and adoption of innovative conservation approaches and technologies while leveraging the Federal investment in environmental enhancement and protection. CIG projects are expected to lead to the transfer of conservation technologies, management systems, and innovative approaches (such as market-based systems) into NRCS technical manuals, guides, and references or to the private sector. CIG does not fund research projects. It is a vehicle to stimulate the development and adoption of conservation approaches or technologies that have been studied sufficiently to indicate a likelihood of success, and to be candidates for eventual technology transfer or institutionalization. CIG funds projects targeting innovative on-the-ground conservation, including pilot projects and field demonstrations.

The Endowment Approach to CIG
Rather than approach the CIG program as a single applicant wishing to implement a specific project at the field level in one of the listed areas of National Concern – water resources; soil resources; atmospheric resources; grazing land; forest health or wildlife habitat – we believe our strength and core competence is found in developing a thematic approach to CIG that tests a single idea or technology in differing geographies. Thus, more rapidly proving the technology and vetting its use in a range of circumstances. For instance, under our 2009 grant we will be seeking to link up-stream water producers (e.g. forest landowners) with downstream water users/consumers ultimately by monetizing the water component of ecosystem services of forests. We anticipate deploying strategies and practices in two to three well-funded watersheds in different parts of the country to gain deep knowledge that can then be used by NRCS and others to transfer those learnings to other watersheds across the country.

Opening the Idea Box
As we think ahead to 2010 and a potential partnership with NRCS again (should such prove possible and be a direction approved by the Endowment’s Board) we want to engage you in bubbling-up those great ideas that meet the spirit of CIG and that would provide measurable results on the ground to advance forest sustainability and the needs of rural forest-reliant communities. We see this as a dialogue that extends the reach of the Endowment and helps us to benefit from the best of ideas from across the country. We offer two ways for you to engage. First, you may chose to just respond to this Blog or if you don’t wish your thoughts to be seen on the web, send your ideas directly to us – michelle@usendowment.org . Either way, we appreciate you taking the time to share with us so that we may consider ways to better target the Endowment’s work to achieve our important mission.

Let the creativity begin!

Thoughts on Overhead Costs versus Programmatic Investment

The Endowment’s commitment to openness and transparency is often a challenge. We get some tough questions. Among those we’ve received recently, was a rather direct one about the ratio of our overhead or administrative costs as relates to the funds that we get to the ground to address our mission. Here’s a quick summary of some of what we shared with our questioner.

Compare us with Peers – Start-ups; Not Long-running Organizations
It shouldn’t be surprising that a start-up foundation would have an “upside down” ratio for a while. As the only non-profit chartered as a totally new entity to receive funds under the Softwood Lumber Agreement (SLA), one would expect a period of time to get our feet on the ground. The Endowment took a very deliberate approach to determining how best to achieve the mission that was assigned as part of the SLA – sustainable forestry and forest reliant communities. While we were “legally chartered” in September 2006, our Board didn’t have its first meeting until late November. Perhaps more importantly we didn’t get our full corpus funding until nearly May 2007.

Thus, the first few months of our existence – December 1, 2006 – March 31, 2007 – were spent in things such as getting an office in place, interviewing staff, building governance policies, developing an investment policy and selecting a fund manager … all with a single staff person. By April 1, 2007 we had our full staffing identified (a total of only 3), to dig deeper into programmatic planning processes and strategic program direction. In total we took about six months to build our organizational foundation and a first-cut at a program. The Endowment board then decided to vet broadly the proposed programmatic plan. Those processes, which were designed to reach out to all interested parties, took an additional six months. Thus, by early November 2008, we publicly announced not only our direction but our plan for programmatic investment – an anticipated $10 million annually beginning in 2009.

The Endowment is a “True Endowment”
In a university setting most endowment funds are sequestered for an average of three years to allow time to build earnings that can be paid out for missional purposes. The U.S. Endowment didn’t have such a luxury. Our one-time infusion of funds – a single $200 million corpus – had to provide for administration as well as program … immediately. Administration costs started on day one. While the Board crafted a very modest plan for overhead costs – just 0.375% of corpus – adequate for a lean staff model with the full corpus … it isn’t when one experiences a significant market decline. Fortunately, being initially chartered as a public charity, we were not bound as are private foundations with the requirement of spending 5% of corpus regardless of the situation.

Investing in Real Change vs. Spending Money
The Endowment Board has taken a very thoughtful and constructive approach to our work. Spending money is easy. Just chip in a few bucks to hundreds of causes. But, the Endowment’s Board wanted to be “systemic, transformative and sustainable” in the change we sought. This requires a very different programmatic investment strategy – one that often means doing a very few things rather than lots of little things and investing with our partners for a longer period of time. Thus many of our grants are for multiple years.

From 0 to 60 in __ Seconds
The Endowment Board adopted a “ramp-up” plan to go from $0 -- our starting point on May 1, 2007 (when funds were in place and invested) -- to full programmatic engagement which we expected to take 2-3 years. We have done this in the face of the greatest market declines and uncertainty since the Great Depression. Our ramp-up strategy has allowed us to stay the course and make several multi-year, multi-million dollar programmatic commitments when some other organizations are being forced to renege on previous commitments. That said, we are doing so in the face of losses to our endowed base in excess of 30% -- thus, in reality we have NO earnings to invest in program. Yet, our Board is navigating the balance between missional focus and fiduciary responsibility in a way that makes us all proud.

Building the Fire Truck on the Way to the Fire
We’ve already touched on the fact that we had to do everything from scratch -- no small task. Thus, when one looks at our first two years of operation – we are clearly upside down on administrative costs vs. programmatic payout. That said, we’ve taken such a conservative approach to showing these numbers that we perhaps do ourselves a disservice. Our Form 990 shows a much truer picture than does our annual report in that two of our three staff members also have heavy roles in program content. If we perhaps more appropriately showed those costs as “program investment” vs. administration, the picture would look much better. But, we chose not to do that. Instead we urge those interested to look not in the rear-view mirror; but ahead. The Endowment’s 2008 Annual Report clearly notes nearly $9 million in programmatic commitments with significant additional leverage that will quickly bring the Endowment’s overhead vs. program ratio into a much more favorable position. In fact, we expect that when fully “at speed” our ratio will be among the lowest of our peer group.

Seeking 21st Century Solutions to America’s Forest Health Crisis

The U.S. Endowment is serving in a catalytic role in a broad-based initiative regarding the potential of biotechnology as a tool in the fight to address forest health challenges. The partnership is designed to assess the potential to develop and deploy scientifically-sound, socially acceptable and rigorously vetted/regulated approaches that might see the benefits of biotechnology used in the fight against the ever increasing list of alien pests and diseases that threaten North America’s forests.

The partnership – “Advancing Forest Health through Biotechnology” -- is a three-year perhaps $10M effort that will use the American chestnut as the test tree. The Endowment has pledged $1M to the effort and will serve on the Steering Committee along with other core funding partners, the USDA Forest Service and Duke Energy. Additional guidance and oversight on the Steering Committee comes from Environmental Defense Fund, The Nature Conservancy and a retired forest scientist.

The Forest Health Crisis in North America is Large and Growing
Millions of acres of North American forests (perhaps as many as 58 million acres in the U.S. alone) in every region of the continent are suffering under an onslaught of pests both endemic and exotic unprecedented in human history.

Global climate change and expansion of global trade both portend a future with an increased number of forest health threats with accelerated rates of expansion.

Traditional Means to Address Emerging Threats Aren’t Enough
Traditional tools to address these emerging challenges fall woefully short of meeting needs. While tens of millions of dollars are being spent to fight existing and emerging threats, most result in triage at best with millions of acres and billions of dollars in forest value lost. (Annual timber losses from exotic pests in the U.S. are estimated at $4.2 billion – not accounting for monitoring, control and environmental losses.)

New challenges and the rapid nature of their expansion call for new tools in the fight. Forest biotechnology offers the potential to provide at least one new tool under timelines not practical with any other technology or response.

Foundations Should Lead and Take Calculated Risks that Others Cannot
The U.S. Endowment believes that it is the responsibility of Foundations to do those things that others can’t or are unwilling to undertake. Biotechnology is neither a panacea nor is it likely the plague that some suggest. The Endowment believes that the best way to explore the scientific potential of the technology is to do so in an open/transparent way that is conducted concurrently with societal discussions and regulatory engagement and oversight.

If the Endowment were to try and engage in traditional battles to address forest health challenges, our additional resources while important, would do little to advance the field. However, through a catalytic role and tightly-focused investment in biotechnology we have the potential to offer societal and forest health values that far exceed our small investment.

Science without Consideration of Social and Regulatory Interests Is Unacceptable
In keeping with the Endowment’s approach to all of its work, advances from this investment would be broadly available to society and all work would be conducted in an open/accessible manner. What sets this initiative apart from others is the commitment to concurrently integrate the science, social and regulatory paths in a single plan.

Frequently Asked Questions
Why is the Endowment supporting this initiative?
Adding a new tool to address North America’s forest health needs fits well with our mission of promoting sustainable forestry and even more directly nests within our initiative to address retention and restoration of healthy working forests. It also aligns well with our core commitments to creating new economic values from forests and benefit communities.

Why is the American chestnut the test tree?
American chestnut was once perhaps the most valuable and wide-spread tree in eastern forests. Its importance as a building material was unmatched. Yet, that is only part of the story. Chestnut was among the nation’s most desirable wildlife food crops as well as a staple for people. By focusing on an iconic tree that crosses the lines of economic and ecological value we have the potential to engage a broad base of interests.

What do you see as some of the biggest benefits potentially coming from this initiative?
While gaining a plantable American chestnut that could offer a new tree and nut crops to landowners and communities up and down the Appalachians would be important, even that pales in comparison to providing new, safe, economical and rapid means to address the growing number of forest health threats.

Aren’t you afraid that biotechnology will go awry and yield “Frankintrees?”
We acknowledge that biotechnology isn’t without potential risks. That said, we too must put things in perspective. Humans have been manipulating plant genes for literally thousands of years through traditional genetic crosses to yield plants and products that meet human needs. The advantage of this work is that it takes a holistic approach to the issue: science will be conducted concurrent with review of societal concerns and regulatory safeguards. Too, as another contextual issue, this work isn’t what one saw in the highly entertaining and perhaps frightening Jurassic Park. In this pilot, two closely related trees – American chestnut and Chinese chestnut – form the base for the work.

An Open Letter to President-Elect Obama

Americans overwhelmingly live in urban and suburban areas -- 80%, with nearly 60% living in just over 150 urban areas. The remaining 20% live in the vast, productive, often-forgotten America beyond. The U.S. Endowment for Forestry and Communities wishes to share some views about infrastructure investments on behalf of rural America.

America is arguably the most blessed nation on earth. Many of those blessings relate not to the material wealth so evident in our urban/suburban lifestyles but to the natural blessings that we too often take for granted. We are a nation endowed with rich soils that yield “amber waves of grain.” On a planet dominated by salt water, we are a nation of fresh, drinkable waters teaming with aquatic life. And yes, we are a nation of forests -- towering pines, oaks and giant sequoias.

Mr. President-Elect, as you assume your new role we urge you to look not just at the shining cities, concrete ribbons of highways and runways and productive factories as the “infrastructure” that powers America. Indeed, we urge you to consider the potential and power of rural America and the “natural resources infrastructure” that not only “built” America but that still holds great potential for our collective future.

There is a Chinese proverb that says all of life’s blessings can be represented by a “0”; with human health a “1”. Without one’s health all other blessings mean nothing. As you look to invest in America’s “built” infrastructure – highways, schools and factories – we urge you to recall that these investments have little value if we lose the rich soils, plentiful and productive waters and abundant forests that set America apart … our “1”.

Take America’s forests as an example of unmatched potential. Fully one-third of our “sea-to-shining-sea” expanse is covered by forests. Simple and yet complex. Perhaps the greatest single gift to our planet, forests provide not only expected products that form our homes and then warm them, but that also serve as the source of clean waters and fresh air. More than 2/3rds of our nation’s potable water is derived from forests – both public and private.

In a time of climate change perhaps no single tool is more diverse and flexible as forests. Not only can they sequester carbon as they grow, they can serve to provide environmentally-preferable products – lumber, paper, rayon and more – that each sequester carbon through-out their long lives and then can easily be recycled without exacerbating greenhouse gasses or leading to pollution challenges.

Yes, forests serve as homes to much of America’s rich and diverse bird, mammal and reptile populations, while at the same time meeting the needs of our nation’s peoples. While forests have housed our population, provided the means to record our history and communicate our feelings, they too have the potential to play a vital role in setting our nation on a course for sustainable energy independence.

America’s forests are as diverse as its people. Not only do the species and types of forests differ, but so do their owners and potential. While we are blessed with lands held in common for all Americans – parks, national forests and wildlife refuges – many of these lands are beset by unprecedented challenges. Climate change, insect infestations, disease and wildfire are all taking a heavy toll. These challenges are inequitably shouldered by our publicly owned forests; yet, these threats are shared by the bulk of our nation’s forests – those stewarded by America’s families, as well.

Whether the term is “ready to go” or “shovel-ready,” when one considers our nation’s natural resources infrastructure, there are literally tens-of-thousands of investment opportunities that will yield family-supporting jobs and economic activity immediately while at the same time yielding long-lasting benefits. The jobs that come from these “green investments” aren’t likely to be out-sourced to other countries nor will the benefits accrue solely to other countries. Neither will they exacerbate global climate change. We urge you to consider investments in the nation’s forests, parks and refuges as well as in private forests and rangelands to ensure adequate supplies of clean water, enhanced storage of carbon, alternative sources of renewable energy and the multitude of benefits that flow from nature’s bounty – renewable wood and paper products, wildlife habitats and places for recreation and re-creation of the American soul and spirit.

We at the U.S. Endowment are, like you, very new in our position. Yet, we are full of hope and anticipate the great change that will benefit not just our generation, but many generations of Americans to come. We stand ready to do our part and look forward to partnering with you to invest in America’s natural resources infrastructure to serve current and future generations. An investment in our nation’s natural resources infrastructure will yield unprecedented potential in terms of environmental and human health, green energy, environmentally-preferable products, clean air and water and a higher quality of life for all Americans – urban and rural.