Why Systems Grantmaking?
Originally, we had a responsive grantmaking approach. Then we moved to foundation initiatives that were portfolios focused on a big issue. We still do both, but we realized after spending millions over the years that we were not having the systems impact we needed and wanted due to the complexity and size of the issues. So we redefined our role; we are curators or stewards of the ecosystem around an issue. As a foundation with an ability to take risks, and as a politically-neutral player not looking for money, we can be the connective tissue between parts of the ecosystem. Grants to charities are now complemented by a robust impact investing strategy, network building within a domain and across sectors, strengthening of community organizations, and investment in social innovation approaches such as labs and developmental evaluation.
— John Cawley, The J.W. McConnell Family Foundation
Philanthropy is ever on a quest to increase effectiveness. Over the last few decades, there have been efforts to be more proactive, strategic, outcomes focused, learning oriented and inclusive. Along this journey, grantmakers have increasingly recognized that impact does not happen in isolation. The daunting problems facing society today are deeply embedded in a web of intractable issues, fragmented relationships and unpredictable events. As a result, philanthropy cannot focus on one issue or set of grantees and achieve long-term change. Instead, grantmakers are trying to influence the bigger picture in all its complexity.
We call grantmaking that analyzes and influences systems and learns about systems change “systems grantmaking.” This is not a new type of grantmaking. It is a way of thinking about and approaching the grantmaking that philanthropists already do. A plethora of resources — frameworks, processes and tools — exist to support systems change, and many of these are being redesigned for grantmaking purposes.
What is a System?
A system is a set of parts (e.g., policies, norms, geographic features, people, forces) that are interconnected. Systems are bounded, which means that people can specify the boundaries for the system. The parts can move in and out of this permeable boundary (e.g., organizations identifying or not identifying as part of a field). Systems are also dynamic, which means that they continually change over time.
A system can be nested within another system like Russian dolls (e.g., a school in a school district in the education system). Systems may overlap without being fully subsumed like a Venn diagram (e.g., education, health, and juvenile justice systems overlapping in relation to academic achievement). Grantmakers might think of an individual, an organization or a network as a system. However, this guide is focused on larger complex systems like fields, issues, sectors, movements or regions.
Systems change refers to changing the parts and their relationships within a system with the understanding that this change will have ripple effects. Systems change often focuses on structures, policies and processes, but these are only some of the ways to change systems. Other ways include shifting resources, values, power, mindsets, infrastructure and many more.
What is Systems Grantmaking?
Systems grantmakers and systems thinkers in the broader social sector
- define the boundary of the systems they are seeking to influence;
- try to understand the relationships among system parts, relationships between the parts and the whole system, and what is emerging beyond the parts;
- assume that the future may be unpredictable and people may disagree about possible solutions; and
- experiment with multiple ways to change the system (e.g., coordination, advocacy, new products or standards).
Systems grantmaking may include but is not the same as collaboration or networks.
What is a Systems Mindset?
It is the grantmaker’s mindset and intent that defines systems grantmaking — not the tool, process or framework. Our understanding of a systems mindset is continually evolving as philanthropists learn from putting theory into practice. However, there are six elements that are critical to systems grantmakers and thinkers today. We share these below along with an example of how systems thinkers could apply each element to climate change.
- Systems grantmakers seek to understand the dynamic nature of a continually evolving system that is more than the sum of its parts. Systems thinkers look at ecosystems, which are interconnected entities that cannot be reduced to discrete parts. As one component changes, other parts of the system change in response, and vice versa. Completely new properties may emerge in a subset of the system (among some parts) or can be generated across the whole system.
- Systems grantmakers do not believe that pulling a lever(s) will necessarily lead to a specific outcome(s). Systems thinkers understand that every part of the system affects and is affected by other parts of the system. Cause and effect are not necessarily linear. They can be two-way, circular, and disproportionately large or small. They cannot be predicted definitively.
- Systems grantmakers look for patterns in systems but do not expect these patterns to stabilize over time. When systems thinkers look for patterns in how systems evolve, they often don’t see a steady equilibrium. Instead, they see irregular patterns such as peaks and troughs (e.g., the stock market’s ups and downs), moments when the system temporarily reorganizes into a new pattern (e.g., a town that experiences a disaster and then recovers), and tipping points when the system changes and cannot go back (e.g., the impact of the industrial revolution or the civil rights movement on society).
- Systems thinkers take a continuous learning, experimental and adaptive approach. At the beginning, grantmakers intentionally shape the grantmaking conditions to support a direction for systems change. They then continually experiment with ways to accelerate systems change and adapt what they are doing based on their vision and what they learn.
- Systems thinkers collaborate with and engage a diverse set of stakeholders (including those who are directly affected by the system). Bringing diverse people together helps grantmakers glean new insights, see the whole system and its parts and relationships more clearly, and coordinate a range of interventions across time and geography. It can also cause people to self-organize; this interaction could catalyze changes to the system that were not previously possible.
- Systems thinkers are aware of their own power and identity and understand the different amounts and types of power among groups. They monitor the larger context of power relations (e.g., social, racial, cultural, political, economic) that can visibly or invisibly impact how systems function and change. They are more likely to include the least powerful members of a system. They also adapt their own role in influencing systems change as needed.
It takes time to understand and practice these elements of a systems mindset. Reading this guide is a good first step. As your fluency in systems thinking increases, it will be easier to convert existing practices into systems grantmaking practices. With a systems mindset, grantmakers may also effectively experiment with new practices, such as applying the resources in this guide or combining them into a larger systems change process.
When is Systems Grantmaking Appropriate?
Leadership from the top embracing a systems grantmaking and investing approach makes it easier to do. I always get asked, ‘Does your board know what you are doing?’ They are comfortable with us playing in the sand box, testing hypotheses, learning from mistakes and developing a coherent strategy over time, and accepting modest results in the short term. They get that successes come years later — and we do have enough successes that they believe this is the way to go. It is about creating conditions and deep-rooted relationship building over years to create big neighborhood change. It isn’t a quick fix project.
— John Cawley, The J.W. McConnell Family Foundation
Grantees operate in systems. A domestic violence shelter operates in a larger system (e.g., a society with laws, perceptions, and attitudes about violence against women and other people). A junior baseball league operates in a larger system (e.g., a community with a parks and recreation system and a society with varying cultural norms about fitness, health and play). A national network for immigration reform tries to influence the political system (e.g., the beliefs, habits and structures around voter engagement).
In each of these examples, a systems mindset could help grantmakers understand how the broader system limits and enables grantee effectiveness and how grantees influence that system. A grantmaker may identify additional ways that it can then influence the system and support its grantees. It may choose, for example, to connect domestic violence shelter grantees with organizations that affect public opinion, to partner with funders of parks to support fitness activities including junior baseball, or to gather and disseminate research on voter engagement across a range of issues.
While systems grantmaking is always an appropriate approach, it is most important for complex situations where there are multiple solutions, little agreement on which opportunity to pursue, and some irrationality or lack of predictability. Systems grantmaking is also a valuable approach when grantmakers work with grantees who are trying to change a system or when grantmakers are trying to intervene in a system more directly.
Being a systems grantmaker is an ongoing process of learning. The field continues to develop systems theory and experiment with ways to apply theory to the real world. Moreover, a number of practitioners are developing processes, frameworks and tools to support systems grantmakers. To analyze whether your organization integrates a systems mindset into your grantmaking, take the Systems Grantmaking Self-Assessment. The results will also help you navigate through this guide.
Interested in more? Here's further reading to consider.