Lucy Bernholz and Tony Wang

BLUEPRINT RESEARCH + DESIGN, INC.

Border Crossing: Working across sectors for social purpose

2 0 1 0
This paper was published with the support of the John D. and Catherine T. MacArthur Foundation.

r+d
BLUEPRINT
research + design for philanthropy

Blueprint Research + Design, Inc. helps grantmaking foundations, individual and family donors, and philanthropic
networks achieve their missions. We offer services in strategy and program design, organizational learning, and
evaluation, and we think and write about the industry of philanthropy. Since 2004, Blueprint has provided the John D.
and Catherine T. MacArthur Foundation with research, advice, and documentation of the Digital Media and Learning
Initiative. That work includes the writing and distribution of five reports on field building, written for the public, as a
means of informing the field of philanthropy and as a way to strengthen the emerging field of Digital Media and
Learning.

The MacArthur Foundation’s Digital Media and Learning Initiative aims to determine how digital media are changing
the way young people learn, play, socialize, and participate in civic life. Answers are critical to education and other social
institutions that must meet the needs of this and future generations. Through November 2009, the foundation has
awarded 106 grants for a total of $61.5 million to organizations and individuals in support of digital media and learn-
ing. The grants have supported research, development of innovative technologies, and new learning environments for
youth — including a school based on game design principles.
Border Crossing: Working across sectors for social purpose
INTRODUCTION
Many of the largest private foundations, which
were created by the vast wealth of individuals
who founded private companies, are starting to
shape and be shaped by the very same corporate
institutions that brought them into existence. In
the past few decades alone, we have seen an
increase in the influence of private-sector man-
agement practices and investment models on the
nonprofit sector. Along with this has come the
rise of social enterprises that are commited to the
ideals of profit plus social impact.
As philanthropy continues to broaden its scope in
a changing institutional landscape, there are many
questions about how it can best use its resources
to support a wider range of institutions.
Foundations supporting sectors that are undergo-
ing rapid change — from the John S. and James L.
Knight Foundation’s work in journalism to the
W. K. Kellogg Foundation’s work on food systems
— are now confronting the many challenges of
moving “beyond nonprofit.” Instead of assuming
the traditional roles of institution building or
sustaining programs to help them grow until
government adoption, funders are examining
other strategies that may accelerate innovation,
support sustainable companies, and protect the
public interest by promoting private interests.
As Ralph Smith of the Annie E. Casey
Foundation recently noted, “Foundation philan-
thropy is increasingly sector agnostic.” Smith
suggests that foundation philanthropy is at its best
when its resources are
directed toward finding, “Foundation philanthropy is
demonstrating, and pro- increasingly sector agnostic.”
moting solutions for the Ralph Smith, Annie E. Casey Foundation
most pervasive and urgent
social problems and that
foundations can succeed only to the extent that
they are willing to pursue solutions wherever they
can be found. As a consequence, the time-
honored relationship between foundations and
nonprofits, while still dominant, is increasingly
surrounded by philanthropic strategies that
purposefully reach out to the commercial and
public sectors.1
The John D. and Catherine T. MacArthur
Foundation’s Digital Media and Learning
(DM&L) initiative offers many opportunities to
work with nonprofits, universities, commercial
game makers, technology companies, and venture
funds. Digital media and learning is a nascent field
informed by and populated with academics, game
designers, museum curators, teachers, media critics,
youth organizers, video experts, engineers, entre-
preneurs, and policy experts. Because of the
multi-sector nature of DM&L, there are many
chances to consider the choices of grants and
Blueprint Research + Design, Inc. 1
investments to support nonprofit and for-profit relationships among social-sector and private-
institutions as well as to promote collaboration sector participants?
among separate sectors.
• What kind of financial resources did the foun-
dation provide (grants, below-market-rate
It is important to note that foundations have been
investments, market-rate investments) and why?
funding and investing in commercial enterprises
and public agencies for some time. What we see
At the end of this report, we provide an overview
in the examples that follow is an evolutionary
of some of the common tools, techniques, and
step forward from individual investments or
practices that enable multiple sectors to work
grants to entire initiatives. In each of the high-
together more effectively.
lighted examples, the funders recognized that
their coordinated strategy rested on the combined
contributions of public, private, and commercial
ACCELERATING STARTUPS: STARTL’S
partners. The strategic work of understanding
ROLE IN LEARNER-CENTERED
existing needs and resources, assessing potential
EDUCATION
funding partners and sources, and considering the
In 2008, after years of funding different initiatives
strengths and weaknesses of different organiza-
in open educational resources, digital media and
tions and sectors all factor into the process.
learning, and high schools and postsecondary
Within these multi-sector frames, the foundations
education, the Hewlett, MacArthur, Gates,
then seek appropriate partners and strive to use
Kellogg, and Lumina foundations started thinking
the right type of funding to achieve both an
about the potential of funding early-stage tech-
institutional goal and the broader social purpose.
nology projects that could create positive change
in the field of education. What the three founda-
This paper focuses on three foundation initiatives
tions realized is that innovation doesn’t always
(see sidebar on page 3) that work across sectors in
have to come from large research institutions or
order to advance a field. Each example provides a
established nonprofit organizations; it can also
detailed illustration of how grantmakers, in order to
come from for-profit startups and young innova-
address a complex and challenging issue, provided
tors. Startl, a nonprofit that seeks to accelerate the
flexible funding as they applied the traditional
process of innovation and change the future of
philanthropic tools in unconventional ways. We
learning, was created to help eliminate the barriers
consider the following questions in each of the
that prevent entrepreneurs from distributing and
case studies:
sustaining needed educational products and
• Why are philanthropic resources necessary to services.
this work?
• How is the foundation helping to structure

2 Border Crossing: Working across sectors for social purpose


EXAMPLES OF WORKING
ACROSS SECTORS FOR
FIELD BUILDING
This paper will draw primarily from the fol-
lowing three efforts to illustrate the differ-
ent ways in which foundations have worked
across sectors to advance a field:
• Startups in Education — Incorporated in
2009, Startl is an education technology
incubator supported by a group of
foundations, including the John D. and
Catherine T. MacArthur Foundation, the
William and Flora Hewlett Foundation,
the Bill & Melinda Gates Foundation, the
W.K. Kellogg Foundation, and the
Lumina Foundation.
• Sustainable Seafood Certification —
The David and Lucile Packard
Foundation, through its Marine Fisheries
program, supports environmental certifi-
cation standards for sustainable fishing
through its work with the Marine
Stewardship Council and its investments
with the Sea Change Investment Fund.
• Cystic Fibrosis Research — The Cystic
Fibrosis Foundation provides grant and
investment funding for cystic fibrosis
research in addition to funding and sup-
porting care centers nationwide.
Why are philanthropic resources necessary to this
work?
As in other fields, technological innovations in
education experience a “valley of death” between
the idea stage and the commercialization stage of
a product’s life cycle. In the commercial sector, a
venture-backed company will move along from
one stage of financing to another — from angel
investments to Series A to Series B and so forth
— until the company files an initial public offer-
ing (IPO) or is acquired by a larger company. In
this process, the commercially viable ideas move
through the valley while less commercially viable
ideas stop receiving funding along the way. In
education, this valley of death is wide and deep
because of the slow pace of school purchasing and
because of the buying power of a few major
industry leaders, among other reasons. Typical
financing structures that exist for other technolo-
gies do not yet exist in the education field. Unlike
other enterprises that rely on venture capital for
innovation, such as Web 2.0 startups or medical
device companies, the field of education lacks a
robust community of angel investors and trade
conferences that can provide valuable access to
reources and networks in a startup’s formative
years. In addition, much of the current education
market focuses on products developed for schools,
which often require significant capital investment
and years of product development compared to
their leaner Web 2.0 cousins.
By themselves, for-profit incubators like Y
Combinator and DreamIt Ventures wouldn’t
select many education startups for their program,
nor would they be able to provide the support
that education entrepreneurs need to successfully
Blueprint Research + Design, Inc. 3
 launch their endeavors. By applying philanthropic
resources as well as public and private investments
to support early-stage education entrepreneurs,
Startl is attempting to build investment-ready
organizations that can successfully move from
idea to concept to sustainable social enterprise.
Startl’s program support includes Design Boost, a
five-day product design and development boot
camp focused on digital learning innovations, and
Accelerator, a three-month residency and immer-
sion in design methods and business practices for
early-stage learning enterprises.
How is the foundation helping to structure
relationships among social-sector and
private-sector participants?
Although for-profit companies sometimes receive
grants from foundations,
Not all for-profit organizations are
they are not always the
aligned to foundations’ missions ideal partner for philan-
and interests. thropies. When a private
foundation wants to pro-
vide a grant to an organi-
zation that is not a tax-exempt 501(c)(3) entity,
it has to use an expenditure responsibility grant,
which increases reporting requirements on the
foundation and places additional burdens on
grant recipients.2 Additionally, not all for-profit
organizations are aligned to foundations’ missions
and interests. Although a grant could have been
made directly to DreamIt Ventures, a for-profit
startup, to manage the Accelerator program, the
company’s pursuit of profit and its specific program
focus on finding and supporting the most prof-
itable startups made it a poor fit. By supporting
Startl (see sidebar on page 5) as a new organiza-
tion that partners with DreamIt, as well as IDEO
4 Border Crossing: Working across sectors for social purpose
(a design and innovation consulting company)
and Berkery Noyes (a mergers and acquisitions
advisory firm), the foundations can support the
field’s overall needs rather than directly managing
multiple small grants to various institutions.
What kind of financial resources did the founda-
tion provide (grants, below-market-rate invest-
ments, market-rate investments) and why?
Startl’s primary role is to provide programs and to
forge partnerships in support of the field. Thus, it
made the most sense for the foundations to struc-
ture Startl as a nonprofit that would receive grants
from foundations without the expectation of a
financial return on investment. Although the
programs that Startl provides create tremendous
value within the field, they would be difficult to
monetize; like many other philanthropic efforts,
Startl invests in creators of learning products
whose social value is hard to fully capture in the
marketplace. However, through its Accelerator
program, Startl does receive some equity in the
teams it supports in order to help offset its pro-
gram costs. Similar in some respects to
Compartamos NGO, a Mexican nonprofit micro-
finance institution that profited immensely from
its investment in and creation of the for-profit
Banco Compartamos, Startl takes a 3 percent
equity interest in every company that participates
in the Accelerator program and plans to use any
windfall profits to reinvest in its own programs.
After the seed stage, startups that complete the
Accelerator program will need additional invest-
ment in order to further test, develop, and market
their products. However, despite philanthropic
involvement in the early stage, traditional market
players may still not choose to meet the financing
needs of promising startups. Venture funds seek to
deliver a certain level of return in a specified
amount of time to their institutional investors.
This may cut them off from investments in which
projected returns materialize over a longer time
frame.Through an agreement that gives the foun-
dations a guaranteed option of participating in
the first round of investment, some foundation
partners may use program-related investments to
help support particularly promising ideas related
to their interests, taking a subordinate or first-loss
position relative to other investors if it is necessary
to attract other funds.3
CERTIFYING SUSTAINABLE SEAFOOD:
THE DAVID AND LUCILE PACKARD
FOUNDATION’S ROLE IN SUPPORTING
MARINE FISHERIES
When you go to a supermarket to buy fresh
salmon, eat at a sushi restaurant, or make shrimp
scampi at home, the seafood you consume comes
from a fishery, an entity that raises and/or harvests
fish. Some of these seafood products come from
fisheries that use good management practices and
other techniques to ensure the sustainability of
their fishing practices, as certified by the Marine
Stewardship Council (MSC); in the United States,
you can buy MSC-certified seafood at national
chains like Costco, Safeway, and Whole Foods.4
For nearly ten years, the David and Lucile
Packard Foundation has been encouraging mar-
ket interventions to promote sustainable fishing
practices, supporting the work of the Marine
Stewardship Council, and providing grants and
investments for other organizations that work to
ABOUT STARTL
Startl is a new social enterprise dedicated
to supporting the innovation of effective,
affordable, and accessible learning products.
Startl’s focus is creating the conditions
for success that let innovators create and
capitalize products that truly help learners
learn.
Startl will:
• Establish vision. Define and diffuse
characteristics of effective, catalytic
learner-centered products.
• Develop talent. Scout and support
innovators creating or wanting to create
learner-centered products.
• Accelerate products. Advance products
to sellable, scalable, and sustainable
state for market.
• Position entities. Help connect startups
to resources, investors, and partners for
product promotion and distribution to
market.
• Evaluate performance. Evaluate the
contributions that Startl network products
have on user-centered learning and will
aggregate, analyze, and freely distribute
research on user-centered learning back
to the education market.5
Blueprint Research + Design, Inc. 5
increase the supply of and demand for sustainable provides, certification benefits from philan-
seafood. thropy’s ability to coordinate efforts among
different organizations in the pursuit of a
Why are philanthropic resources necessary to this common goal.The Packard Foundation, as part of
work? its Marine Fisheries program strategy (Figure 1),
The end goal of any certification strategy that funds not only the certification agency itself but
aims to achieve social or environmental objectives programs that provide technical assistance and
— whether it’s fair trade or the Green Building information to companies considering MSC
Council’s LEED (Leadership in Energy and certification, venture investments for distributors
Environmental Design) certification scheme — who buy sustainably caught fish from responsible
is to increase supply and demand in certified fishermen, and grants to groups like the
products. In the example of fair trade, if more Monterey Bay Aquarium, which publishes the
companies produce fair-trade products and more popular Seafood Watch pocket guide of sustain-
people consume them, more farmers and farm- able fish for consumers.
workers can lift themselves and their families out of
poverty. But despite the value created for producers, Fig. 1. Seafood Markets Strategy: Dynamic Models of
retailers, and consumers, certification systems are Change8
difficult to implement without philanthropic
funding. Developing a common standard for cer-
tification, enlisting willing producers and retailers,
and marketing the brand to consumers are all
costly endeavors that may be difficult to offset
completely with fees, especially in the early stages
when the value of certification has yet to be
proven. As the Bridgespan Group points out in an
analysis of its work concerning the Forest
Stewardship Council and the Marine Stewardship
Council certification and eco-labeling programs,
“Whether certification systems can ever be self-
supporting isn’t clear; what is clear is that this isn’t
a plausible short- to medium-term goal.”6 While
certification systems do charge companies to
become certified,7 most continue to rely on phil-
anthropic and public sources of funding to main-
tain and accelerate the adoption of their standards.

In addition to the financial resources philanthropy

6 Border Crossing: Working across sectors for social purpose

How is the foundation helping to structure
relationships among social-sector and
private-sector participants?
The Marine Stewardship Council is a nonprofit
gateway between the large for-profit buyers of
seafood and the fisheries that provide the catch.
But the Packard Foundation supports organiza-
tions that work with multi-sector partners along
the entire continuum from catch to consumer.
EcoLogic, a nonprofit that provides affordable
credit and financial training to groups (including
fishing cooperatives), works with fishermen
directly to provide loans that enable them to
improve their engine efficiency and reduce their
environmental impact. Further up the supply
chain, the foundation engages major buyers like
Walmart to help lead industry support for reform.
As part of its broad platform for corporate
engagement, the Packard Foundation supports
the Conservation Alliance for Seafood Solutions. In
2008, the alliance developed “A Common Vision
for Environmentally Responsible Seafood” as a
joint strategy to encourage companies to support
meaningful change.9 While the foundation initially
took the role of orchestrator, helping organiza-
tions to do what each does best and work together
to achieve common ends, the Conservation
Alliance is now taking the initiative. As a result of
the alliance’s critical work, fourteen of the top
twenty retailers in the United States and Canada
now have direct partnerships with nonprofit organ-
izations working on the sustainable seafood issue.
On the consumption end, the Packard Foundation
made early investments to support Greenpeace
USA’s “Carting Away the Oceans” campaign and
is now able to take advantage of the opportunities
SEA CHANGE INVESTMENT
FUND — KEY FACTS
The Sea Change Investment Fund is
distinctive because it:10
• Is an environmentally driven fund
• Targets the middle of the seafood supply
chain
• Focuses solely on environmentally-
preferable seafood
• Uniquely blends philanthropic and
private capital
The fund is governed by two advisory
committees that include professionals in
the conservation, seafood, finance, and
investment communities. Sea Change
Management, which created the fund,
partners with its Conservation and
Investment Committees to determine
which opportunities will advance the fund’s
dual conservation and financial goals. After
working with entrepreneurs to structure
financial terms and a path to improve
environmental performance, both commit-
tees have to separately approve of the
deal before an investment is made.11
Blueprint Research + Design, Inc. 7
for partnership that have grown out of that initia-
tive. Greenpeace has motivated retailers to act by
using a seafood sustainability scorecard developed
during the campaign to evaluate supermarket
chains.12
Simultaneously pressuring companies and part-
nering with them has required trust and coordi-
nation. Although such collaboration can be costly
and is not always appropriate when groups lack
strategic alignment, the Packard Foundation has
found it to be valuable in promoting communi-
cation and coordination among nongovernmental
organizations and corporations that may not have
the resources, Internet bandwidth, and program-
matic coverage to make an impact on their own.
As a result of its efforts, the foundation is
currently seeing an upward trend ofincrease in
memorandums of understanding and other indi-
cators that groups are working together and
building stronger connections.
What kind of financial resources did the founda-
tion provide (grants, below-market-rate invest-
ments, market-rate investments) and why?
In order to promote the adoption of certified
sustainable seafood, the Packard Foundation
needed to support different types of institutions
with different forms of capital. The foundation
provides grants to nonprofits like the MSC and
Monterey Bay Aquarium and uses program-related
investments to give organizations the maximum
financial support the foundation is willing to
provide. The fisheries program makes loans to
organizations that provide capital to enterprises
that advance the sustainability agenda, such as
EcoLogic and the Sea Change Investment Fund.
8 Border Crossing: Working across sectors for social purpose
This investment fund focuses on expanding the
market for environmentally preferable seafood.13
Investments in Sea Change’s portfolio include
Advanced BioNutrition, which has developed
an algae replacement for fish-oil and fish-meal
products, and Wild Planet Foods, which sells
seafood products from environmentally preferable
fisheries.14
ACCELERATING RESEARCH: THE CYSTIC
FIBROSIS FOUNDATION
Cystic fibrosis (CF) is a genetic chronic lung
disease that causes mucus in the lungs and diges-
tive tract to be thick and sticky, decreasing the
average lifespan for individuals with the disease to
approximately thirty-seven years.15 The Cystic
Fibrosis Foundation, which was established in
1955 by a small group of parents who had
children with the disease in order to lengthen and
improve the lives of people with CF,16 is the
primary funding sponsor of CF research.
Why are philanthropic resources necessary to this
work?
Biotech companies decide how to spend their
resources for pharmaceutical research based on
profitability projections for certain markets. In
such calculations, diseases that affect a significant
percentage of wealthier populations will usually
take precedence over diseases that affect a small
number of people or are only prevalent in devel-
oping countries. Although it is the most common
chronic lung disease in children and young adults,
cystic fibrosis affects only 30,000 people in the
United States and 70,000 people worldwide.17
Medical disease foundations like the Cystic
Fibrosis Foundation play a critical role in the
market for research on drugs developed for the
treatment of rare diseases, known in the industry
as orphan drugs. These foundations provide the
additional incentives necessary for companies to
engage in medical research while also identifying
opportunities to accelerate the research process
through better coordination.
How is the foundation helping to structure
relationships among social-sector and
private-sector participants?
Academic researchers and pharmaceutical com-
panies face a number of challenges in coordinating
research and interacting with one another.18 For
example, while a researcher at a university may
learn that a particular compound is ineffective in
treatment, other researchers in the same field
may be left in the dark. Another common situa-
tion occurs when two researchers conducting
Fig. 2. Therapeutic Drug Discovery Pipeline19
the same tests in different institutions find out
after the fact that they were engaged in similar
efforts, wasting resources in unnecessary duplica-
tion. The problems of inadequate information
sharing and collaboration among research scien-
tists, which is exacerbated by incentive systems at
universities that promote publication at the
expense of collaboration, can be addressed by
philanthropic support. To tackle this issue, the
Cystic Fibrosis Foundation established the
Research Development Program, a network of
research centers at different institutions that
encourages collaboration by helping to identify
research priorities for the field, forming science
teams, and hosting conversations and panel
discussions to share and disseminate new research.
The foundation also helped create the CF patient
registry as part of the common infrastructure that
is used by both for-profit and nonprofit groups.
Blueprint Research + Design, Inc. 9
What kind of financial resources did the founda-
tion provide (grants, below-market-rate invest-
ments, market-rate investments) and why?
The National Institutes of Health (NIH) is the
primary agency of the U.S. government responsible
for biomedical and health-related research and
operates as a complement to private sources of
funding. NIH funds what private markets will
not, focusing on basic research for discoveries that
are unpatentable (and therefore less likely to
attract private funding) and applied research in
medical products that affect a small number of
Americans.
Philanthropy plays a complementary role to
industry and government efforts, avoiding areas
that are already funded by public and private
sources. One such area is “translational research,”
which helps translate basic research to applied
research (Figure 2). FasterCures, a nonprofit think
tank that seeks to accelerate medical solutions,
says that such philanthropic investment in medical
research plays a unique, critical role by funding
gaps in research, adding that “for some diseases,
nonprofit funding models are virtually the only
source for innovative research.”20
The Cystic Fibrosis Foundation, through its
Therapeutic Development Awards program,
offers grants to companies that have a potential
cystic fibrosis compound or drug and want to
engage in preclinical work or pursue a clinical
trial. When the foundation funds a clinical trial,
the foundation receives royalty rights in exchange
for its funding. This serves a dual purpose: First,
the foundation avoids issues of private inurement
by making sure the exchange is fair and hasn’t
10 Border Crossing: Working across sectors for social purpose
excessively benefited the company conducting
the clinical trial. Second, the foundation can sell
royalty rights for drugs that are successful, allowing
it to reinvest the income.
TOOLS, TECHNIQUES, AND PRACTICES
FOR WORKING ACROSS SECTORS
Each of the foundations in the previous examples
engaged in strategies that involve understanding the
philanthropic opportunity, building partnerships,
and using all available resources. In this section,
we reflect on some of the techniques and
practices funders use to work across sectors.
SEEING THE WHOLE SYSTEM
To successfully work across sectors and funda-
mentally revise how various stakeholders within a
field relate to one another, funders need to coor-
dinate strategies and direct organizations toward
the common goals of the field. In the Packard
Foundation’s case, the strategy for sustainable
seafood certification required consideration of
various value chains and the supply chain from
sea to table.
PRACTICING SECTOR AGNOSTICISM
The board of the Heron Foundation once
famously asked whether the foundation should
be more than a private investment company that
uses its excess cash flow for charitable purposes.21
Since then, the practice of mission-related investing
has grown significantly among private founda-
tions, with several organizations advocating
for specific allocations of foundation capital. The
National Committee for Responsive Philan-
thropy suggests that a grantmaker practicing what
it calls “philanthropy at its best” would pay out at
least 6 percent of its assets annually in grants and
invest at least 25 percent of its assets in ways that
support its mission.22 The More for Mission
Campaign seeks to increase mission investment
commitments by foundations to a total of 2
percent of foundation endowments, representing
approximately $10 billion of capital.23
The reality, however, is that there is no hard-and-
fast rule about how much a foundation ought to
allocate toward grants, program-related invest-
ments, and mission investments. While most
foundations budget resources before identifying
the needs of a field, practicing true sector agnos-
ticism will require greater flexibility in allocating
funding. Ideally, foundations should first identify
the issues of a field, determine optimal strategies,
and then use the resulting analysis to help inform
a decision about whether spending down the
endowment, putting all of the foundation’s
resources into mission investing and program-
related investing, or some strategy between the
two will generate the most impact.
SHARING INFORMATION DIGITALLY
The explosion of social media tools like Twitter,
Facebook, blogs, YouTube, and other platforms
have already made obvious the potential of sharing
information digitally. Much of the nonprofit
sector has already adopted these tools for
fundraising, marketing, and communication. But
their uses for working across sectors are different.
Instead of focusing on page views, social networks,
and communities, these efforts emphasize stan-
dards, interoperability, and relevancy. Startl, as part
of its mission to develop a knowledge base
around learner-centered education, has been
hosting a blog chronicling different organizations
related to the field as a resource for potential
applicants and entrepreneurs. The Packard
Foundation, as part of its efforts to encourage
companies to assess the costs and benefits of
adopting certification standards, is working with
a grantee to design a “web-based platform for
sharing fishery-specific sustainability information,
such as environmental assessments, scientific
research, management reports, certification status,
and alternative sources of product … (that will)
add value to existing and new NGO-corporate
partnerships by offering action-based, solution-
oriented information upon which to make
decisions.”24
CONCLUSION
Working across sectors requires clear understanding
of why philanthropic resources are necessary,
especially when private and government
resources may be available. Strategies for reshap-
ing relationships among different actors to pro-
mote collaboration can help funders and other
stakeholders efficiently allocate the work that
needs to be done in the sector.
In all three initiatives discussed here, the founda-
tions calibrated their roles based on analysis
of funding alternatives and discussion with
financing agents from the public sector and
private commerce. In some cases, such as Startl,
actual partnerships were formed. In others, such
Blueprint Research + Design, Inc. 11
as Packard’s work with the fisheries, the strategic
placement of philanthropic funds was geared
toward tipping market practice and creating
incentives. These kinds of calculations require
working knowledge of the priorities and motiva-
tions of both commercial and public-sector
entities. Philanthropic funds are used not just to
fill a gap in funding but to mitigate some of the
risk at the development stage so that the market
can carry forward successful innovations.
This role as risk mediators is not entirely new for
foundations; some foundations have provided
loan guarantees and program-related investments
in this way for decades. It does require a different
type of decision making than most grantmaking
processes, however, as well as access to commercial
market research, private investor partners, and
public-sector colleagues. The three initiatives
described in this paper provide a glimpse of the
evolution of these practices, the weaving of these
new relationships, and, possibly, new philanthropic
norms.
NOTES
1“Nonprofits and Philanthropy: Scenario II—An Interview
with Ralph Smith,” Nonprofit Quarterly website,
http://www.nonprofitquarterly.org/index.php?option=
com_content&view=article&id=1665:nonprofits-and-
philanthropy-scenario-ii-an-interview-with-ralph-
smith&catid=150:from-the-archives.
2 “What is expenditure responsibility?” Council on
Foundations website, http://classic.cof.org/FAQDetail.cfm?
ItemNumber=681.
3“CGAP Reflections on the Compartamos Initial Public
Offering: A Case Study on Microfinance Interest Rates and
Profits,” CGAP website, http://www.cgap.org/gm/
document-1.9.2440/FN42.pdf.
12 Border Crossing: Working across sectors for social purpose
4 “MSC labeled seafood in shops and restaurants — United
States,” Marine Stewardship Council website,
http://www.msc.org/where-to-buy/msc-labelled-seafood-
in-shops-and-restaurants/united-states.
5 “About Startl,” Startl website, http://startl.org/about.
6Robert Searle, Susan Colby, and Katie Smith Milway,
“Moving Eco-Certification Mainstream” (San Francisco:
Bridgespan Group, July 2004), http://www.bridgespan.org/
WorkArea/linkit.aspx?LinkIdentifier=id&Item ID=1070.
7
B Corporation charges member companies an annual fee
based on annual sales, the Green Building Certification
Institute charges a flat rate for each project registration, and
TransFair charges an annual fee per pound of produce.
8 This figure appears in a draft of “Strategy for Market-
Intervention Tools to Conserve Marine Fisheries,” (Los
Altos: David and Lucile Packard Foundation, March 2007), 4,
http://www.packard.org/assets/files/conservation%20and%
20science/marine_fisheries_strategy_041007_Web_site.pdf.
9
Notably, the “Common Vision” identifies the following
six critical areas in which seafood companies can demon-
strate environmental leadership: commitment, data collec-
tion, procurement, transparency, education, and reform.
“Steps to Achieve a Common Vision for Environmentally
Sustainable Seafood,” Conservation Alliance for Seafood
Solutions website, http://www.solutionsforseafood.org/cv4.
10“Funding Strategy,” Sea Change Management website,
http://www.seachangemanagement.com/fund/strategy.
11
“Portfolio,” Sea Change Management website,
http://www.seachangemanagement.com/fund/portfolio.
12
“Carting Away the Oceans,” Greenpeace USA website,
http://www.greenpeace.org/usa/press-center/reports4/
carting-away-the-oceans.
13“Sea Change Fund, “ Sea Change Management website,
http://www.seachangemanagement.com/fund.
14
“Decision Making,” Sea Change Management website,
http://www.seachangemanagement.com/fund/
decisionmaking.
15
“About Cystic Fibrosis,” Cystic Fibrosis Foundation
website, http://www.cff.org/AboutCF.
16“Cystic Fibrosis Foundation Strategic Plan Report”
(Bethesda, MD: Cystic Fibrosis Foundation, 2009), 7,
http://www.cff.org/UploadedFiles/aboutCFFoundation/
Publications/StrategicReport/Strategic-Report-2009.pdf.

17“About Cystic Fibrosis,” Cystic Fibrosis Foundation

website, http://www.cff.org/AboutCF.

18 For a full list of key issues affecting progress in the tradi-

tional academic research system, see: “Entrepreneurs for
Cures: The Critical Need for Innovative Approaches to
Disease Research” (Washington, DC: FasterCures, May
2008), 6, http://fastercures.org/objects/pdfs/white_
papers/FastercuresWP_Innovation_052808.pdf.

19“Entrepreneurs for Cures: The Critical Need for Innovative

Approaches to Disease Research” (Washington, DC: Faster
Cures, May 2008), 5, http://www.fastercures.org/objects/
pdfs/white_papers/FastercuresWP_Innovation_052808.pdf.

20 “Philanthropy Advisory Service—Meeting Market

Needs,” FasterCures website, http://www.fastercures.org/

index.cfm/OurPrograms/Philanthropy_Advisory_Service.

21“Expanding Philanthropy: Mission-Related Investing at

the F. B. Heron Foundation,” (Manchester: Southern New
Hampshire University School of Community Economic
Development, 2007), 3, http://www.fbheron.org/documents
/snhu_heron_casestudy.pdf.

22“Criteria for Philanthropy at its Best,” (Washington, DC:

National Committee for Responsive Philanthropy, 2009),
82, http://www.ncrp.org/files/publications/paib-fulldoc_
lowres.pdf.

23“About Us,” More for Mission Investing website,

http://www.moreformission.org/page/15/about-us.

24 “Strategy for Market-Intervention Tools to Conserve

Marine Fisheries,” (Los Altos: David and Lucile Packard
Foundation, March 2007), 6, http://www.packard.org/
assets/files/conservation%20and%20science/
marine_fisheries_strategy_041007_Web_site.pdf.

Blueprint Research + Design, Inc. 13