A Grant Maker Focuses on Helping to Build Nonprofits’ Operations

By Nicole Wallace
Posted by permission of The Chronicle of Philanthropy.

Less than a week after the Omidyar Network gave a $1.5-million grant to the African Leadership Academy, a Johannesburg charity dedicated to cultivating the continent’s next generation of leaders, Fred Swaniker, the academy’s chief executive, attended the annual gathering the grant maker holds here for the nonprofit organizations and social-purpose businesses it supports.

He didn’t lose any time making contacts. A day and a half into the meeting, Mr. Swaniker had already persuaded three fellow participants to make the journey to South Africa to speak to the students in his program and talked to the founder of Kiva, the fast-growing charity whose Web site lets people lend money to entrepreneurs in developing countries, about a possible partnership.

“Obviously the financial support that the Omidyar Network has given us is helpful,” he says. “But above and beyond that, we’re finding that connecting us to these other entrepreneurs who are working on similar issues so that we can collaborate, that’s been powerful.”

Intensive Help
The executive forum is just one example of the Omidyar Network’s growing focus on helping the organizations it supports strengthen their operations.

Over the past three years, the network, in Redwood City, Calif., has added to its staff experts to help organizations recruit and retain top-flight employees, develop compensation structures, and create succession plans. Omidyar pays for its grantees to hire outside consultants to help them in other areas, such as business planning and board development. And, taking a page from venture capitalists’ playbook, Omidyar officials often join the boards of directors of the organizations the network supports.

Network officials say that the organization spends more than 10 percent of its operating expenses to provide such help to nonprofits but declined to give a specific figure.

The Omidyar Network, created by eBay founder Pierre Omidyar and his wife, Pam, is not alone in turning its attention to the strength of the organizations it supports. In a 2008 study published by Grantmakers for Effective Organizations, nearly two-thirds of the 820 foundations surveyed reported they had done some kind of work with their grantees in the past two years to help bolster their operations.

But the network is one of a relatively small number of grant makers—including Social Venture Partners and the Edna McConnell Clark, Deaconess, and James Irvine foundations—to provide intensive assistance on an array of topics.

There are some “brutal facts” about foundations’ efforts to help nonprofits strengthen their organizations, namely that it usually takes longer and costs more than they expect, says Kathleen P. Enright, chief executive of Grantmakers for Effective Organizations.

“Being able to declare victory and move on doesn’t always happen,” she says.

Not all grant makers can muster the patience required for such work. “I sometimes wonder if that’s why foundations shy away from capacity building,” says Joe Pon, vice president for programs at the James Irvine Foundation, in San Francisco.

Revealing Imperfections
Sal Giambanco, the man who heads the Omidyar Network’s program to help organizations strengthen their operations, has had a career that has taken some unusual turns. For a decade, he served as vice president of human resources and administration at PayPal and eBay, where he became close to Mr. Omidyar and Matt Bannick, the network’s managing partner and former president of eBay International. But before that, he was a Jesuit priest who worked for 15 years in hospital and education ministries.

Mr. Giambanco’s past experiences serve him well as he confronts one of the central challenges that foundations face when they offer in-depth organizational assistance: charities’ reluctance to admit their shortcomings.

When he talks about how the network is able to win the trust of the organizations it supports, he explains the structure the network has put in place. The management advisers are separate from the people who decide which organizations get money—and, unlike other network executives, he doesn’t take board positions at the groups that Omidyar supports.

But Mr. Giambanco also cites his old life when talking to grantees: “When our partners want to really expose their imperfections, they can always invoke the seal of the confessional with me.”

The charities and businesses that the network supports are located all over the world, so Mr. Giambanco is on the road a lot. During the first six months of this year, he traveled to India and London twice, as well as Kenya, Peru, and several countries in Southeast Asia, and those are just the international trips. During the same period, he went to New York four times, Seattle three times, and Washington twice.

“Nothing commits more to a relationship than showing up,” he says.

Meeting Face-to-Face
Mr. Giambanco’s frequent-flier miles serve an important purpose. Chief executives of organizations that receive Omidyar money say their personal interactions with network staff members convinced them early on of the sincerity of the Omidyar Network’s intentions. The bigger challenge, they say, was persuading their employees and board members, who were used to a more guarded relationship with foundations.

The network’s legal team provided assistance when BRAC, an antipoverty organization founded in Bangladesh that now works in 10 developing countries, hired its first general counsel. When the woman BRAC hired came to United States for a conference, Omidyar’s legal counsel flew to San Antonio to meet with her.

BRAC’s new employee “called me and said, ‘What’s this about? Am I really supposed to tell them what our challenges are? This is one of our funders,’” recalls Susan Davis, chief executive of BRAC’s U.S. affiliate. “I said, ‘Yeah, I think they just want to help us, one legal counsel to another.’”

Over the past two years, Mr. Giambanco and members of his staff have worked closely with BRAC on a succession-planning effort that looks beyond the chief-executive position. The organization has created a plan to develop leadership throughout its ranks. An effort to train young workers is already in place, and another program to nurture senior leadership is in the works.

BRAC has benefited greatly from the Omidyar Network’s comprehensive approach, says Ms. Davis.

“If every foundation tried to do this, we’d be overwhelmed,” she says. “So I don’t know that it’s something that everybody can copy, but to have enough key investors provide the ‘more than money’ assistance is extremely helpful.”