How Headwaters' Streamlined GO! Grants Help Build Relationships (Without Overburdening Grantees)

Headwaters Foundation in Missoula, Montana is a health conversion foundation that has been committed to embracing Trust-Based Philanthropy since its inception. This commitment has led to a number of innovations – including GO! Grants that are designed to put grant funds in the hands of grantees in less than a month – as well as some informative lessons. We sat down with Headwaters CEO Brenda Solorzano to get the full scoop.

Can you explain what it means to be a health conversion foundation?

Health conversion foundations are foundations created as a result of the sale of a not-for-profit health entity in a community. This has become more and more practiced across the last 20 years, where Attorneys General across the country have mandated health entities that have been sold to put the proceeds back into the community in the form of a foundation. Usually this results from the sale of a hospital, healthcare system, or other health delivery agency. As the [health] industry has shifted from a not-for-profit to a for-profit realm, it has generated a lot more health conversion foundations around the country.

When and how did Headwaters Foundation come about?

Community Medical Center in Missoula sold to a larger hospital in 2015 and the proceeds of that sale created the Headwaters Foundation endowment. A board was instituted and they started the CEO search in late 2016. When I came on in 2017, I was handed keys to an office, business cards, the endowment, and a board. They asked me to set everything up—from hiring and staffing, to strategic planning, to building our grantmaking processes and procedures.

You accepted the job with a desire to change the status quo of how philanthropy operates. Can you share more about this vision? 

Because I’d been doing [work in philanthropy] for 20 years, I had been struggling with bureaucratic culture the sector has created. Program staff were spending an inordinate amount of time pushing paper, with a focus on board meetings rather than being out there in the community. In my previous roles, I tried to tweak around the margins, rethink staff roles, and simplify the grantmaking process for grantees—and I always came across barriers. Either leadership was not open to [change], or there was general organizational inertia.

When the Headwaters opportunity came about, I saw it as an interesting and exciting opportunity to reinvent philanthropy and turn it on its head. Before I took the job, I had a conversation with the board about their openness to being community driven and serving as innovators on re-inventing philanthropy. They said yes, and that was one of the main reasons why I accepted the job.

How did you first connect with the concept of trust-based philanthropy? 

I happened to be on the planning committee for the GEO conference last year, where I connected with Pia [Infante, Co-Executive Director of The Whitman Institute] and Phil [Li, President of Robert Sterling Clark Foundation]. When I heard them talk about Trust-Based Philanthropy, it was so aligned with how I was already thinking that I invited them to come to Montana to present the framework to my board.

What was the value of bringing outsiders to present to your board? 

Some of the elements of Trust-Based Philanthropy are really innovative and novel. I thought about wanting to [approach my work in this way], but I didn’t have some evidence-based research piece I could show to the board. What I had in Phil and Pia was two organizations that had been thinking about similar ideas, practicing them, and talking about it. It offered a validation of other funders doing the work, so the Headwaters board could have some confidence in taking up trust-based philanthropy. It was also instrumental for Pia and Phil to share that while there are common elements to trust-based philanthropy, the way it gets operationalized can look very different from foundation to foundation.

How have you tailored trust-based philanthropy for your needs?

We’re a new foundation, so we didn’t have any existing [grantee] relationships. One of the things we had to do as we were designing our strategic plan and developing grantmaking programs, was to build relationships with the community. We wanted the community to feel represented in the decisions we were making.

The other piece is what I call trust-based philanthropy 2.0. We’ve developed GO! Grants, where we are essentially saying to the community, if you are mission-aligned (building the resiliency of children and families in western Montana) and if you work in western Montana, we should be supporting you. We’ve built the grantmaking system so people don’t spend more than an hour applying for a GO! Grant. The system pre-approves applicants almost immediately, and we run through an internal review and approval that is very expedited because our board has already preapproved the grant framework and allocation. Applicants will be able to receive a check for up to $5k within a couple weeks.

What do you hope to accomplish with the GO! Grants?

We want to understand the uptake and what organizations will do with this money. We’ve also built in intentional learning, where we can spend time in the field, getting to know the organizations we fund, understanding what they’re doing, determining how else we can be helpful to our grantee partners and figuring out whether we should grow GO! Grants.

What challenges have come up as you’ve been instituting this process? 

What was most surprising was when we were in process of developing these grants, the abundance of caution shared by nonprofit community leaders. People were coming to me saying I had to do more due diligence, asking how I was going to make sure [applicants] were doing what they said they’d do with these funds It was interesting to hear nonprofit leaders espouse the bureaucratic practices that foundations have historically pushed on them. It seems like everyone will need to develop a different paradigm of philanthropy if trust-based philanthropy is going to become standard practice.

The other challenge we’ve run into was building out a grants management system that would live up to audit requirements. We spent some time talking to our auditors and it became clear that we needed to make sure there were multiple levels of reviews in our internal grant approval process and that approval stages were clearly documented. The board and I agreed that we would do additional due diligence in select cases where something is flagged that makes us want to dig a little deeper. But we also acknowledged that we might make a few mistakes, and there might be some grants that aren’t successful… but we have to be comfortable with that!

What advice do you have for someone wanting to start a trust-based foundation? 

1) First, reflect on the why; 2) Work collaboratively with the board, so you bring them along, and don’t get too far ahead; and 3) Engage with the community to make sure what you’re doing makes sense to them and is supportive of their missions.

And finally, be bold and creative. A lot of people new to philanthropy will go and see what’s already been done. You can very quickly go down the road of a traditional approach. If you start from a clean slate, and try not to look at what philanthropy historically has done, and think about how to make the work as easy and seamless as possible and build opportunities for organizations in the community to really do the work, what would that look like? That gives you flexibility to think differently and outside the box.

(Note: This post originally appeared on The Whitman Institute’s blog on June 28. 2018, and has been reposted with permission)