Working in collaboration with our partners, donors, and grantees, we work to shift the philanthropic mindset from feel-good charity to strategic investment by using the best available evidence and community insights to identify and invest in poverty-fighting programs that deliver the highest impact. We’re then able to build a portfolio of the most impactful grantees working across a broad spectrum of interventions to end poverty in our community.
On average, every dollar we invest is projected by the best available evidence to generate more than $5 in quality-of-life improvements for people experiencing poverty in the Twin Cities.
Evidence Over Anecdotes
We call this approach Bright Giving. It means we prioritize evidence over anecdotes. We use the best available information to make the best possible investments to eliminate poverty in our community. We offer donors the confidence that 100% of their philanthropic resources will be invested to fight poverty as impactfully as possible. And we back it up by providing donors with access to details about insights into those impacts.
Why this evidence-based approach to grantmaking? Because when Minnesota is lauded for being the most charitable state in the country while one-in-five Twin Cities residents live in poverty, clearly something isn’t adding up. Constellation is here to provide a vehicle for optimism and change. Many donors intuitively understand the inefficiency of making philanthropic decisions based on their own intuition, contextual knowledge, and sphere of influence. In partnership with Constellation, we’re able to help them get the most of their philanthropic dollars.
The Philanthropic Marketplace
Like any philanthropic funder, the Constellation Fund represents a marketplace of ideas. In our case, the market is not filled with vendors offering fruits and vegetables, but instead with committed organizations offering many different types of philanthropic interventions. In the commercial world, the goods that sell in a market are sorted and ranked by the interaction of supply and demand, and with key indicators like profits and losses. In the philanthropic world, by contrast, competition cannot be relied upon to select the interventions having the largest impacts. The task of sorting is left to the judgment of the funder.
At Constellation, we believe that this judgment should be informed by the best possible information. To accomplish this goal in support of our poverty-fighting mission, Constellation uses data and research to carefully value the measurable improvements that differing poverty-fighting interventions are making in the living standards of residents experiencing poverty. Specifically, we thoughtfully leverage peer-reviewed research, local demographic information, and data from nonprofits to conduct careful benefit-cost analyses that allow us to better understand the relative impacts of different poverty alleviation programs. We match that best-in-class quantitative analysis with thoughtful qualitative evaluations – such as the quality of a nonprofit’s leadership and on-the-ground insights about pressing community needs – in order to fund the poverty-fighting interventions that, judged with all the best available evidence, are the most promising among available options.
Working with leading local economists and research organizations, Constellation has developed a metric-driven evaluation framework to help determine the relative impacts of different kinds of poverty-fighting interventions. Through the careful application of this framework, Constellation can reliably estimate the expected long-term quality-of-life benefits that a proposed nonprofit program will create for low-income individuals and families. Having valued these measurable benefits, Constellation can then create an evidence-based benefit-cost analysis for each prospective nonprofit grantee. This allows for comparisons between the poverty-fighting impacts of otherwise dissimilar intervention types, such as that of an early childhood education program to that of a housing program for homeless veterans.
Once Constellation has conducted these quantitative analyses, we can consider allocating our resources to the programs with the largest poverty-fighting impacts. For example, investing a dollar in Program A, whose benefit-cost ratio is 5:1, instead of in Program B, whose benefit-cost ratio is 1:1, creates $4 of extra per-dollar benefits for people experiencing poverty at no additional expense to our donors.
Instead of investing $1 in a program whose benefit-cost ratio is 1:1
We invest $1 in a program with a benefit-cost ratio of 5:1
That creates an additional $4 of poverty-fighting impact at no additional expense to our donors.
More Than Metrics
Careful benefit-cost analysis is central to Constellation’s approach to fighting poverty and is used to help create our portfolio of the most effective grantees to support each year. However, metrics alone are not enough to inform these key decisions. Just as a smart college admissions officer would not admit a class of prospective students based solely on SAT scores, Constellation does not base its funding decisions solely on quantitative analysis. Careful consideration of critical qualitative factors is key to informing Constellation’s investments. It is only by thoughtfully building into our grantmaking process all of this information – quantitative and qualitative – that Constellation can ensure precious philanthropic resources are invested in the interventions shown to be most promising in the fight against poverty.
Our Response to the COVID-19 Pandemic
The COVID-19 pandemic has only strengthened our resolve to effectively and responsively address the heightened challenges facing the 650,000 people already living in poverty in the Twin Cities, a number that will almost certainly rise in the aftermath of this crisis. We don’t yet know the full ramifications of this global crisis, but we do know this: under-resourced and vulnerable communities are being hit the hardest. As a community, we need to act quickly. And while we need to be generous, we need to be smart.
That is why our team has consulted with nonprofit partners, our network of world-class experts, and other innovative philanthropic leaders across the country to launch a holistic effort that creates immediate-, medium-, and long-term impacts for the individuals and families facing extreme hardships as a result of this unprecedented challenge.
Our plan is to Relieve, Respond, and Redouble: