Stephanie Teleki, Director of Learning and Impact, California Health Care Foundation
Laila Bell, Vice President of Learning and Impact, Skillman Foundation
Jaime Vazquez, Senior Associate of Planning and Evaluation, The Pew Charitable Trusts (formerly Omidyar Network)
Grantmakers In Health’s Maya Schane spoke with Stephanie Teleki of The California Health Care Foundation, Laila Bell of The Skillman Foundation, and Jaime Vazquez of The Pew Charitable Trusts about their recently published article in The Foundation Review, “When Shift Happens: Navigating Toward a Framework for Responsible Philanthropic Exits.”
Exits are a part of philanthropy, and few funders stay engaged in one approach or strategy indefinitely. The piece explores how philanthropy can be a powerful source for social change beyond the funding period, and how a foundation’s exit can significantly impact the field it is leaving in both the short and long term. When done thoughtfully, work can continue long after a foundation ceases its funding, but a poorly executed exit risks undermining progress that has been made and can leave the field worse off than before funders became involved.
The article offers a framework for responsible exits, outlining seven core elements for foundations to consider to support grantees, communities, and fields in continuing the work even as the funder steps away. This framework is meant to serve as a starting point for other funders to engage with, challenge, and refine for future use.
What prompted the Skillman Foundation, California Health Care Foundation, and The Pew Charitable Trusts to come together to develop this publication at this time?
Stephanie Teleki: In each of our roles, we have experienced exiting processes at the foundations where we work. Also, speaking as a grantee before I came to philanthropy, I experienced foundations coming and going. Now, each of us works in learning-focused units in philanthropy. We are interested in helping our organizations enter and exit funding spaces thoughtfully and responsibly, and we were grappling with questions of what that means in practice.
We know each other from different circles, like Grantmakers for Effective Organizations and the Emergent Learning Community. We were each independently working through these questions at our own foundations as we were entering and exiting different portfolios.
This topic was top of mind as each of our organizations were exiting areas of long-term investment. We were managing these changes during disruptive times—having to make hard choices about where we put our limited funding. In philanthropy, sometimes that means deciding to exit something in order to make space for another body of work that perhaps was a higher priority in the given moment. We recognized that we were each grappling with similar issues, so we decided to grapple with them together.
Importantly, when we were looking at the literature and talking amongst ourselves, it struck us that many of the exiting frameworks that were already published were mainly or exclusively focused on the funder’s experience. We read observations like, “we [the foundation] exited well, our reputation is intact, and we made space for a new thing.” The grantee partner’s experience is at least equally as important or even more so than the funder’s during an exit process. We wanted to think about that more deeply and create a holistic framework, especially in this moment where there is such a loss of funding from the federal government. Funders are being asked to step up to focus on new things. As the field is having to make hard choices about where to invest resources and what to sunset, it is important that we are thoughtful about the impact of our actions. So, it seemed like a particularly good time to revisit this topic.
There’s one other thing I want to note: we authors are each at very different foundations. Laila is at Skillman based in Detroit, which is a place-based funder in that area. I am at a state-focused foundation, and we fund in California. And Jaime has had a very broad national lens at Omidyar Network and now at The Pew Charitable Trusts. Nonetheless, we were able to come up with principles that apply no matter what, because whether you see people from the organizations you are funding at the grocery store in your neighborhood, or whether you’re working in international realms like at Pew and Omidyar, you still have to maintain relationships. It’s still on you—the funder—to hopefully leave things better than you found them, and certainly not worse off! That was an interesting reflection that we’ve had—some people might look at [our framework] and think it doesn’t apply to them or their work, but we actually found that regardless of the level at which you are operating as a funder, the size of the funder, or other differentiating factors, these principles are relevant and important to keep in mind.
Can you define what you mean by philanthropic exits, and why they happen?
Jaime Vazquez: The term exit certainly carries different meanings across philanthropy. In this article, we’re defining philanthropic exits as intentional shifts or withdrawals of a foundation’s support from a field, ecosystem, subfield initiative, or geographic location. In other words, an exit occurs when a foundation ceases its provision of funding or non-monetary resources. By “non-monetary”, we mean the provision of supports like strategic communications, networking or convening in a space, or using the foundation staff’s knowledge and voice to hit on their objectives. When you see a foundation ceasing provision of funding or those non-monetary resources for substantial, typically multi-year efforts, that’s part of what we include in “exiting.”
It’s important to remember that funders exit for various reasons. Oftentimes there are internal factors like strategic refreshes or shifts in goals. There are also external factors, as Stephanie has referred to in these turbulent times, for example with the loss of federal funding in some areas. Leadership transitions can also lead to exits, whether that is a new CEO with a vision for how to shift funding, new board members, or a decision to intentionally spend down foundation resources.
Successfully changing entire systems—including health, education, or criminal justice—is work that is challenging, dynamic, and requires years of work; yet few funders will support a single strategy indefinitely. The reality is that while funders often aspire to exit once goals have been met, many exit before that point. Exiting is just the practical reality of our sector, and the three of us support our field in exiting well, in ways that avoid—or at least minimize—destabilization and negative outcomes. We want foundations to focus on how we exit, with the goal of being respectful and supportive of those who remain in the fields in which we have funded.
What are the potential consequences of a poorly executed philanthropic exit?
Laila Bell: The true cost of a bad exit is not evenly shared. Communities and our nonprofit partners bear the brunt of the challenges that poor exits create. Potential disruptions of important programs, jostling priorities for grant partners, and broken trust with the communities we seek to serve are just a few of the issues that come to mind. We also know for smaller grassroots or BIPOC-led nonprofits, those challenges can hit hardest depending on access to other resources and support. A hasty or poorly thought-out exit risks leaving the field worse off than we found it and can leave our partners scrambling to find resources to address the gaps and continue their work in the communities they serve.
When funders exit a body of work, it sends a signal, whether we want it to or not. If we were intentional, we would have built the relationships, communicated with clarity, and ultimately affirmed that the work continues to be important, absent our involvement. Without intention, however, stories fill in the gaps, and those stories may or may not resonate as true with the rationale behind our funding decisions or the value of the work happening. That has implications for grant partners in ways that undermine progress, stall momentum, and stress relationships between nonprofits and funders.
In the article, you talk about the importance of considering exit strategies from the beginning of the investment. Can you describe what this looks like in practice?
Stephanie Teleki: We have been using the phrase “begin with the end in mind.” What that means is that when you’re planning a strategy to enter an area, you should also be thinking about and preparing for the circumstances under which you will exit and the ways in which you might do so. From the beginning, keep the fact that you will eventually likely exit top of mind. Obviously, this is asking a lot. A lot of us get into spaces and then we learn—we’re learning as we go, the grantees are learning as they go, and so is the community. We’re not trying to say everyone needs to have a crystal ball and be able to perfectly map out everything. We’re not expecting perfection. But what we are saying is do not enter something if you have not thought at least a little bit about how, when, why you might be leaving that place—and give these issues some thought at the start.
It’s also important to think about the durability and sustainability of your investments from the beginning. Not everything we fund can go on forever without grant funding. But in many cases, it may be possible to help build the funder field and/or identify consistent funding or other mechanisms to have the work live on (e.g. something is incorporated into school curricula or is added to regular Medicaid reimbursement). This type of approach should be built into the vision of the work so that when a funder exits, it’s a responsible exit that leaves some lasting infrastructure behind.
It is also important to invite dialogue with the grantee and field partners, to be transparent and frank from the very beginning, so everyone understands the foundation’s intention and commitment. Again, that doesn’t mean that everyone needs to know exactly how everything is going to transpire. What is appreciated is for the funder to say “we don’t know, but this is what we’re currently thinking,” and ask how that resonates with partners and what their concerns are about the plan. Those kinds of honest dialogues are the way you build trust, move forward in the relationship in a meaningful way, and hopefully hear from the those you are ultimately trying to support. This approach speaks to having humility and honesty, and operating with transparency at all times as best you can, so that there is a shared line of sight.
[The California Health Care Foundation] has entered spaces sometimes where we act as seed funders—we’re in a space for five to 10 years, and we try to move the needle as best we can with the resources we have. Our goal is to try to be very clear about our seed funder rather than long term role. We have heard back that grantee partners appreciate us being clear about our approach, because at least they can be aware and prepare. Otherwise, they are left guessing, which is anxiety provoking, doesn’t foster honest relationships, and can undermine the work.
From your work, can you give an example of a successful philanthropic exit that operationalized aspects of the 7-point framework in this report?
Jaime Vazquez: We want to be clear that there is no perfect exit. From our own experiences and from what the literature points out, exits are always hard. Practically speaking, it’s also difficult to evaluate whether an exit is “successful,” because there are middle- and long-term impacts that the field rarely returns to measure.
The point we want to get across is that by following the seven principles outlined, foundations can improve the odds that the exit is done responsibly. This means being respectful, attentive, and caring to the relationships that have been created between funders and the organizations and communities they are trying to support. This is very difficult work. Even when funders exit well, there is still harm done no matter what—money and support are leaving.
In our report, we wanted to illuminate the voices of our community partners, to share things that are helpful for funders to think about, and what we can do that partners would appreciate. In one of the grantee interviews during our data collection process, I asked if they could share an example from their experience about an exit that went well, or one that did not. That grantee told me, ‘Your foundation, [Omidyar Network], did a really good job. The program officers were in communication early and often. There were very generous ramp down funds to ensure that there was significant investment and belief in the field as Omidyar was departing,’ and they labeled us as being in the upper quartile of exits they had experienced. That was really encouraging to hear. But that is also balanced by knowing you are going to leave gaps, so you need to be conscious of what you can do to bring attention, share the work your partners have done with other funders, and do capacity strengthening work throughout the process so that partners are set up and left better off than we found them at the beginning of the relationship.
You recognize in the article that philanthropic exits do not always happen under ideal circumstances, and that unresolved tensions can sometimes remain. How can funders navigate these situations to mitigate short- and long-term consequences?
Laila Bell: The ideal circumstance is that the big, complex, important, but messy social challenge that we work on is addressed and solved. When I reflect on my experience as a funder, that does not happen that often, if at all! What is more likely to happen is that important work is underway, but priorities, resources, and capacities shift, and we need to adapt accordingly.
In the short run, as funders, we can communicate with clarity, honesty, and humility. One of the things we did during a recent exit was to set intentions for our exit and to hold ourselves accountable to them. For example, we developed guiding principles for the exit—and shared them not only internally, but also with our grant partners—so that we were aligned on what to expect and how we wanted to be held accountable.
For [Skillman’s] grant partners, we did an analysis of the financial implications of the exit by budget size and organizational characteristics (such as BIPOC-led partners), and then we designed off-ramps for the exits. They were long off-ramps, and they took into account what equity looks like during the transition period. This helped to absorb some of the impact and challenges of the exit. As we transitioned one of our funding priorities [at Skillman], our off-ramp was a three-year funded step down with differentiated levels of funding, with more funding going to those organizations that would be hardest hit, like the smaller, BIPOC-led and grassroots organizations. We also provided additional capacity-building resources above that grant amount, to be used at the discretion of the organizations however they thought necessary to support their transition during the three-year step down. We did it that way because when looking at the literature, we saw that nonprofits often put all the money to serving the immediate needs of the communities, beneficiaries, and partners, and then they still have capacity needs that go unaddressed, particularly during an exit. Providing that long step-down with ample resources, and also saying that there is money specifically for capacity, sustainability planning, communications, fundraising, or whatever the nonprofit needs, was important because our partners then felt like they had license to actually use the money for those things, rather than having pressure to use them in other ways. This is one of the things I heard from partners that was unique about our exit, which our partners really appreciated and found to be helpful.
Internally, we created a cross-departmental team to get us all on the same page about the exit, while also leveraging different skills and resources to help inform planning. One of the things I heard from a partner during a nonprofit interview was that there is a risk of hearing different messages from different people in the foundation if they haven’t done the work internally to get aligned. Creating a cross-functional team mitigates that and is also helpful in assessing and understanding the implications of the exit for the grant partner and the field.
Also, at Skillman, we have a value of being greater than grants. At our foundation, we talk about using our SMIRF, which refers to the many types of capital that philanthropy has available for changemaking, beyond just our checkbook. We used every type of capital in this exit—our Social capital in helping connect grant partners with one another and bringing other funders into the conversation; our Moral capital to help affirm the important of this field and this body of work, even as the foundation transitioned its grantmaking strategy; our Intellectual capital in the analysis that informed equitable off-ramps and also by compiling and curating research and data related to the field that helped continue to make the case for progress and the issue’s importance; our Reputational capital of showing up as a good partner and pulling together principles of how we wanted to show up during the exit; and then obviously our Financial capital.
Longer term, one of the ways funders can support both the field and their nonprofit partners is by learning—documenting the lessons learned and returning that learning to the field and to nonprofits. We frequently hear that everyone is busy doing the work, and sometimes it’s difficult to pause and reflect on what we’re learning. However, helping to curate and consolidate lessons helps other funders enter the field smarter than we were when we started funding in that area, and helps the nonprofits leverage each other’s collective wisdom about what they have learned and discovered over the course of the funding engagement.
At [Skillman], we’re learning from our approach to exiting, and we’re holding ourselves accountable. We’ve commissioned an external evaluation to learn: Did we live up to those principles we established before the exit? How did our nonprofit partners actually experience us at that moment? Most importantly, what can we learn and do better in the future? Philanthropy is a field that doesn’t have lots of accountability, and I believe deeply that one of the greatest forms of accountability is around how we learn and improve our practice so that we better support our nonprofit partners and the communities we serve.
As a learning organization, we try to pause and reflect on our exit in real time, to ask ourselves to what extent we are actually embodying a responsible exit and to document our lessons learned. But that is not enough; we cannot grade our own papers, even with the most humility and the best intentions. We need external accountability as well. One of the things [Skillman] does is listen to and learn from the grant partners themselves, as an opportunity to identify what we got right and where there may have been a disconnect between what we wanted to accomplish and what our partners actually experienced.
In your article, you discuss the importance of sustainability planning and capacity building as elements of success after a foundation exits. What does this look like in practice for partners? What impact can it have on grantees and communities after a philanthropic exit is complete?
Jaime Vazquez: It’s important for foundationsto help with capacity strengthening and supporting grantees to think about what durability looks like after a funder has exited a field. This means providing grants for things nonprofits often don’t have the time or funds to focus on, but that are critical to the health of their organizations, such as leadership development, strategic planning, financial management, fundraising and organizational development strategies, internal culture, board management, and more. It’s important to note that this isn’t something funders can do at the end of a relationship or at the end of their time in a field—this should be strategically thought of, planned for, and executed from the beginning of the relationship, or else you risk playing catch-up and you never truly do catch up.
Some of the aspects of trust-based philanthropy—like providing general operating funds—can be very helpful to nonprofit partners. There’s a caveat though, which is that sometimes nonprofits are so dedicated to those they are serving that they won’t spend general operating grants on their own organizational development. This is why foundations that don’t provide general operating support may instead give grants specifically aimed at supporting nonprofits to build their capacity and stay strong. For example, I was at a conference recently where disability justice advocates were talking about joy grants—grants specifically enumerated for activists and community leaders to have joy, reflection, and space in between the diligent work they do to serve their communities. Organization capacity strengthening can take on many varieties, but it builds in durability and the field-building elements needed for that field to prepare for an exit and take a long-term view of what they are trying to achieve.
What can get in the way, particularly regarding internal dynamics, that could make it difficult for funders to engage responsibly during an exit?
Laila Bell: We talk about exits as though they are a completely transparent decision that all staff make together, but that’s not always the case. Sometimes the decision behind why funders exit or transition a body of work may be unclear to the staff who are responsible for implementing and executing it. Regardless of what’s driving the decision, we need to align inside the foundation to reduce the amount of disruption, confusion, and conflicting messages our grant partners experience.
There is also an emotional aspect of the exit, for both our grant partners and our staff. It’s a really emotional experience on both sides of the equation, and that makes it more challenging. One thing I saw in the literature is that you do see staffing transitions during exits. That emotional component needs to be recognized, acknowledged, and even planned for, for both your staff and the grant partners.
Stephanie Teleki: Portfolios are sometimes people’s jobs, and when the foundation exits, someone may be losing their job because the foundation has decided to get out of something. Also, the person who has been leading that work the whole time may no longer be working at the foundation while the work is ramping down, so that can cause complexities. Sometimes during CEO changes, something that was a high priority for one CEO may not be of interest to the new one.
What key insights and practices do you think funders should take away from this article, particularly health philanthropy?
Stephanie Teleki: The biggest message we want to leave is, regardless of where you fund, what level you fund, or the topics you fund in, try to follow these seven principles as much as you can in each exit. Perfection is not possible, and none of us will do each one of these principles every time, but these are the North Star. If you pay attention to them, you will be further along in doing a responsible exit.
We’ve said this a lot, and we’ll say it again: don’t just start thinking about the exit when you already have one foot out the door. Begin with the end in mind, years in advance. Be intentional, and work on relationships at the start, recognizing that as the funder you’re trying to build trust, grounded in humility, honesty, and transparency. If you do that, you will be helping the field, and you won’t leave it high and dry abruptly, which is incredibly debilitating, destructive, and potentially undermines what you have spent time trying to build up.
Importantly, we also have to remember the grantees, and that seems so basic to say, but at times we are all guilty of the funder-centric dialogue in our organizations at different levels, when the grantee is the secondary thought even though it should be completely flipped—the grantees should always be front and center.
No one is off the hook—we think these principles relate to all kinds of funders. What is extraordinary is that our three organizations—as diverse as we are in what we fund and how much we fund—have come together to say these principles apply in all of our work, and they are a constant through-line that we think should be applied to all exits.
Lastly, we welcome colleagues in the field to look at these principles and tell us if there is something missing. What was left out or needs to be changed? We hope that this is not a static set of principles, and we want it to spark dialogue with grantees and funders. Hopefully, over time it will continue to improve as the field and ecosystems evolve. Our hope is to infuse another point of dialogue in the ongoing conversation about exits, and that this work will be carried forward by others as well.
Laila Bell: Ultimately, no foundation can be fully responsible for the sustainability of a field or a partner. It’s important to do the best you can by being accountable, thoughtful, and proactive. Use your SMIRF to try and leverage every resource available to support partners, while also acknowledging that even at your best, you cannot be solely and fully accountable for that sustainability.
Finally, we need to talk about power, because the decision to exit ultimately lies with the foundation. We can seek input from grant partners, and there are areas where we can act on feedback, but there are other areas where we can’t. It’s important to be transparent about that and make that distinction when communicating with our grant partners. I know people will experience those tensions as they endeavor to have responsible exits, and we couldn’t resolve them, but at least we can name them, empathize with partners, and acknowledge that it’s important to consider power as you begin to exit.