Strategic Inflection Point Funding

Peter Sloane

Chairman and CEO of the Heckscher Foundation for Children


As seen on Philanthropy News Digest

“A strategic inflection point is a time in the life of business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.” —Andrew S. Grove, August 2, 2013

At the Heckscher Foundation, we’re attracted to funding opportunities that we view as venture philanthropy, whether in the form of strategic partnerships with other funders, catalytic initiatives, or targeted solutions.

I’d like to share three examples.

  • Our strategic partnerships with other funders led to the creation of Take the Field, a public-private partnership which secured a 1:3 match from New York City for every private donation. The Foundation made an initial grant and eventually the strategic partnership raised $36 million in private sector funding and $97 million in matched public sector funds to rebuild 43 state-of-the-art outdoor athletic facilities.
  • The Foundation’s catalytic initiative, Single Stop USA-Community College Initiative, was piloted through a model program at Kingsborough Community College and reduced dropout rates among participants by 50 percent. As a result of our founding support and these strong outcomes, other foundations and the City adopted the program, and it is now available to eligible students across the two-year City University of New York (CUNY) system.
  • One of our targeted problem-solving solutions addressed the fact that The New York Summer Meals Program, which provides free breakfast and lunch to qualified public school students, historically served hundreds of thousands fewer children over the summer than during the regular school year, despite high need. To increase awareness of and participation in this essential program, the Foundation initiated and for three years supported a program that distributed refrigeration units, flyers, and posters and conducted outreach about Summer Meals. This produced a 31 percent increase in participation in the program in the first year, and continued significant increases in the second and third years of funding, resulting in hundreds of thousands of additional healthy meals reaching children each summer.

We’re increasingly attracted to a closely related concept, strategic inflection point funding, which looks through a different lens at venture philanthropy. Inflection point funding seeks to change the course of a young person’s life at a key juncture. Like venture philanthropy, it involves strategic partnerships with other funders, catalytic initiatives, or targeted solutions, but it also looks hard at the obstacles that keep underserved low-income youth from realizing their full potential.

Inflection point funding forces us to ask, “If we can solve this with our funding, does it have the potential to create (to paraphrase Andy Grove’s words) an opportunity for the young person to rise to new heights? Or, conversely, could the failure to solve this lead to a significant downturn in a young person’s life trajectory?”

It is a big thorny question, and it’s not always easy to distinguish inflection point opportunities from those that seem like they might be but aren’t. There are no easy guidelines. As one very smart funder once told me, “You have to know it in your kishkes.” So let me take a stab at defining three potential opportunities for funding at a few inflection points we are thinking about and see if you, the reader, can feel it in your kishkes:

Diagnosing and Treating Dyslexia in Kindergarten

The diagnosis of developmental dyslexia in underserved children is primarily based on a “wait to fail approach.” A poor child has to endure a prolonged period of time before interventions are put into place by the school. That means that a diagnosis of dyslexia is usually not given before third grade, at the earliest, despite the fact that many studies now show that intensive interventions are most effective in kindergarten or first grade. The greatest myths about dyslexia screening are that signs of dyslexia can only be seen after 2-3 years of reading instruction and that screening is expensive. Numerous studies have reported that when at-risk beginning readers received intensive instruction, 56 to 92 percent (across six studies) reached the range of average reading ability. A group of leading scientists is developing an app that is meant to be quick and easy enough for professionals to use at preschools, pre-kindergarten information sessions, summer camps, and other venues, or even for parents at home. If a risk is detected, the app would offer a list of tools for educators, parents, and social workers, such as websites with teaching resources and intervention programs. A modest investment could significantly improve the likelihood that this app would become available to underserved youth in the near term. To us, this sounds like an inflection point.

Youth Library Fines

There are hundreds of thousands of New York City children who are not allowed to take out books from the three New York City Library Systems because they have outstanding fines of less than $15 dollars and therefore have “blocked” library cards. The overwhelming majority of youth with blocked cards reside in the poorest quintile of neighborhoods served by the library systems—particularly in the South Bronx, housing the highest number of underserved families across the city. Even more shocking is that for children and youth who reach $25 overdue fines that accumulate in Brooklyn, the account is automatically sent to a collection agency which, incidentally, also tacks on an additional $10 agency fee, compounding the total amount due. We all know how collection agencies work so imagine if you are a poor (possibly illegal) immigrant

who is subjected to them for a “phantom” fine. I use the word “phantom” because the amount bears no relation to the “loss” suffered by the library as a result of a lost or overdue book. Said differently, a fine that accumulates to $15 is likely attributable to a book or books that would cost only a few dollars to replace. To underscore the phantom nature of this, we’re told that libraries do not carry these fines as even contingent receivables on their books. Why don’t they eliminate these fines? Because they work for more affluent families and generate revenue, and the libraries simply will not or say they cannot do what many cities do and decline to impose them in poor neighborhoods. In our view, library fines operate in a punitive manner, preventing hundreds of thousands of young people from borrowing books and research materials essential for assignments that must be completed outside of library access hours. Further, the majority of students in New York City do not have access to in-school libraries. This problem cries out for a solution. To the libraries’ credit, some fixes have been tried. Still, we think this is an inflection point that calls for a creative solution that has the potential for significant impact.

College Emergency Grants Programs

Each year, college students who are otherwise in good academic standing, some just a few semesters away from graduation, end up withdrawing from academic programs because of an unexpected economic emergency or setback that is unrelated to tuition: medical expenses, housing costs, textbook and supply costs, transportation issues, and other life challenges. In many cases, college completion rates are lowest for low-income students, first-generation students, and students of color. Without the earning power a credential or degree can provide,

they often struggle. This issue is magnified when students abandon academic programs that lead to high-demand careers—positions remain unfilled, and employers and the economy both take a loss. The Great Lakes Foundation sought to address this issue by establishing emergency grant programs at each of the 16 colleges of the Wisconsin Technical College System. During the three-year grant period, nearly 2,700 students received emergency grants averaging $500 each. College-reported data indicates that, over the three years of the program, 73 percent of Pell-eligible emergency grant recipients either graduated or remained enrolled. By comparison, the National Center for Education Statistics reports a 59 percent retention rate for all students at public two-year institutions. The New York-based Petrie Foundation and Gerstner Foundation also identified and have funded this issue, and our hats are off to their funding in this area. But no other such interventions we have found have calculated the impact of an emergency grants program on completion rates. Recently, CUNY, at the urging of both Petrie and Gerstner, have sought to identify what programs exist at the 24 CUNY colleges. This, of course, is a step in the right direction but, given the modest cost of such initiatives (programs), we are asking ourselves how we can replicate and expand them. This strikes us as an inflection point worth focusing more resources on and we are looking at creative solutions to do so.

While we aren’t sold on the idea of crowd-sourcing solutions, we’d like to hear your feedback on these inflection point funding opportunities. Are they worth it? Are they likely to have a positive impact? Do you know of other high-leverage investments we should be making instead or as well? We welcome your feedback.

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Chairman and CEO
Heckscher Foundation for Children