The Discount Foundation

Location: Henderson, Nevada

Assets: $8.6 million (1996)

Major Program Categories: Jobs and Living Wages for the Poor

Case Study Focus: Jobs and Living Wages for the Poor

Contact: Susan Chinn, Executive Director
email: Susanchinn@msn.com

409 Crater Court
Henderson, NV 89104
phone: 702-547-6319
fax: 702-547-6389

A small foundation awarding approximately $400,000 in grants a year, the Discount Foundation had long been lauded by its colleagues for the clarity of its program focus. As a result, Discount's Board of Directors and its sole staff person, Executive Director Susan Chinn, carefully approached the process of deciding whether or not to shift that focus away from affordable housing and what to pursue next.

Reflecting on the foundation's work since the late 1980s, Discount president Jeffrey Zinsmeyer raised several questions, "Discount must decide, given relatively modest payout, how can we maximize our impact on enormous social and human needs? And how can the foundation respond creatively in an ever-changing social environment while maintaining a realistic focus and funding strategy?" Despite these challenges, Zinsmeyer and the rest of the foundation's leaders were clear that "first and foremost, Discount supports progressive change that addresses systemic causes of the maldistribution of wealth and power."

Since the late 1980s, the Discount Foundation had mainly supported housing advocacy organizations, although it also awarded grants to community groups seeking empowerment for poor people in urban communities. In 1996, after eight years of this program focus, Zinsmeyer, Chinn and the rest of the Discount board began discussions about future grantmaking. Foundation leadership continued to share a commitment to affordable housing for people with low household incomes. However, they also felt it was important to take a realistic look at the changing environment in which housing advocacy organizations operated.

Chinn assessed the foundation's experience with housing in an April 1996 board memo. As she reviewed grantees' work, she found many positive results from the foundation's $1.3 million investment. Among other accomplishments, the foundation had supported organizations that helped preserve public housing and increase the resources available for affordable housing at the state level.

Moving from Housing to Employment

However, circumstances had changed considerably over those eight years. The political environment was increasingly at odds with grantee efforts to increase and improve affordable housing resources. Funds for affordable housing were declining, while cutbacks in income and supports for the poor were mounting, as evidenced by the push for welfare reform. Chinn's memo faced this reality, concluding, "The prospects are bleak for housing as a national priority." Therefore, Chinn suggested, while the foundation could continue to invest in affordable housing, the results from such efforts would likely diminish over time.

Chinn recommended decreasing 1996 housing funding, and continued decreases in the future. In the same memo, Chinn assessed the foundation's urban empowerment grantmaking, noting that it had supported some of the country's leading organizing efforts targeted to declining wages, jobs and a changing economy. The program's major limitation was the inherently local nature of its grantees and the scope of their work.

Despite that concern, Chinn recommended continuing the urban empowerment program and giving priority to emerging community organizations and/or projects in communities of color. The memo outlined a strategy that would:

• Build urban groups' capacity and support relationship building across metropolitan borders;

• Support more experimentation in constituency building; and

• Place priority on groups that could increase their constituents' knowledge of the economy and take action on issues related to jobs and wages.

Creating an Economic Security Program

Chinn's memo identified economic insecurity and income inequality as "the defining issues of our time," and asserted that this could be an opportunity for Discount to become involved in advancing a progressive economic and political agenda. Chinn suggested taking a year to define the program and offered several suggestions for pursuing the development of a program initially called Economic Security. These included:

• Learning from activists already engaged in jobs-related community organizing;

• Exploring the potential for linking academia with community organizing on economic issues; and

• Documenting the impact of the Baltimore living wage ordinance spurred by grantee BUILD, a community organization associated with the Industrial Areas Foundation.

Over the next year, Chinn immersed herself in contemporary writing and thinking on the American economy. She consulted with individuals with whom the foundation had long-standing relationships, including activists and funding colleagues, and reached out to a range of new sources. The more than 60 organizations she consulted and learned from ranged from labor groups such as Detroit-based Teamsters for a Democratic Union, to policy organizations such as Jobs for the Future and the Preamble Center for Public Policy, to community/regional employment projects such as WIRE-NET in Cleveland, to community organizations across the Northeast and Midwest, including Greater Boston Interfaith Organization and South Suburban Action Council in Chicago.

For Discount's late fall 1996 interim board meeting, Chinn wrote another paper taking her recommendations for changing the foundation program a step further. And all through the next year, in keeping with the organization's tradition, Chinn sent the Board lots of written materials from journals and popular periodicals.

Making a Case to the Board

During her year of research and planning (mid-1996 to mid-1997), Chinn commissioned a study to analyze the impact of the living wage legislation won in Baltimore by BUILD and its allies. The study, undertaken by the Economic Policy Institute and researchers from Johns Hopkins University, analyzed the legislation's impact on city finances and the wage and employment opportunities of affected workers.

In addition to informing its own work, Discount was motivated by a belief that this study would help inform dozens of other organizations around the country working on similar campaigns. As Chinn argued in her next major program-framing paper, "BUILD's living wage campaign...marked an exciting new phase in community and labor organizing."

For the spring 1997 Board meeting, Chinn prepared a substantial background paper to support her primary recommendation that the foundation adopt only one grant program focused on organizing calculated to increase jobs and wages for those without jobs or in low-wage jobs. Chinn recommended prioritizing programs that would build membership in unions and community organizations and working relationships among different community institutions.

Chinn presented a strong analysis of the factors that suggested such a decision would be both timely and likely to met with success. These factors included:

• A newly-constituted labor movement emphasizing increased membership and political power, and a view that its constituency extends beyond members to working people generally. Despite its recent history of decline, the labor movement's unique assets continue to include national infrastructure and resources. "Labor's national vision and capacity," Chinn argued, "lends an important aspect to organizing for economic justice" that more geographically bound community organizing traditionally lacks.

• The debate about jobs and living wages wrought by welfare reform. This included the structure of reform, which moved implementation and debate down to state and local levels where local organizations could potentially exert influence.

• Increasing anger among working people about stagnating wages and job instability amidst a boom economy.

• Serious challenges to the notion that democracy and civil society can only be sustained within a society fueled by unfettered free-market capitalism.

• The emergence of community organizations and progressive political organizations targeting increased wages and jobs for the poor, as well as corporate accountability.

Consistent with Discount's philosophy and history, Chinn asserted that increasing people's collective power would be a prerequisite to halting the country's careening momentum towards unsustainable economic inequality. Therefore, she argued, Discount's economic security grantmaking would be best focused on building power among poor and working people to affect jobs and wages primarily through community and labor organizing.

Building Links with Organized Labor

While there was great interest in the direction Chinn proposed in 1996, Discount's board did not rubber-stamp her recommendations. Each step along the way, members asked tough questions, requested additional information and debated the pros and cons of moving away from the foundation's existing focus, developing a program so dependent on the health and effectiveness of new labor, and narrowing the foundation's scope to a single focus.

The Neighborhood Funders Group: A New Focus

During the year she immersed herself in labor, jobs and wage issues, Sue Chinn also began to advocate among colleagues for increasing collective knowledge about organized labor and issues facing low-wage workers. She had discussions with representatives of more than a dozen national, regional and local funders about their potential interest, and found an ally in Henry Allen of Boston's Hyams Foundation, then co-chair of the Neighborhood Funders Group. Together, they created the Working Group on Organized Labor and Community, a network of grantmakers interested in learning more about organized labor and labor/community relations. By mid-1997, the network included representatives of 30 foundations and had launched several initiatives: Developed a listserv for its members; Convened a one-day pre-conference meeting of funders, labor and community groups prior to NFG's October 1997 annual conference in New York; Organized sessions at the Council on Foundations annual meetings in 1997 and 1998; and Sponsored a pre-conference session with national labor representatives for network members attending the Council's 1998 annual meeting in Washington. Working Group membership now numbers about 90, including several other funders developing related grants programs. They include the Catholic Campaign for Human Development, Needmor Fund and Public Welfare Foundation. Discount's role in building the Working Group is consistent with its historic organizational philosophy. As board member Marge Tabankin explains, "You need strategic allies when you're small."

Board member Garland Yates remembers board reactions as mixed. "Some board members all along had reservations about housing...that real change is going to happen." However, in considering the prospects for moving toward an emphasis on labor's role in building economic security, some board members were concerned that the New Labor Movement would not prove to be more progressive than the "old" one.

Yates believes he might have been the board member who needed the most convincing. He readily expresses a skepticism about labor's record on issues of race and gender, and he believes New Labor's progressive views have yet to have a real impact on union locals. Board member Margery Tabankin sums up the level of board discussion by saying, "I don't know that anybody came to the original discussion with this as their priority for the foundation's funding." What everyone shared was "a frustration with achieving real political power for poor people." And, even though he was hesitant about the labor-focused program, Yates now says, "I do think...this is a pretty bold thing to fund the intersection between labor and community."

Forging a Consensus

Taking time - approximately two years between the original 1996 memo to the first round of grants - was extremely important in maintaining the cohesiveness of a board that had worked together for quite some time. Tabankin believes lengthy staff and board exploration and discussion finally led to consensus. "[It] allowed us to walk away from our own pet agendas to a point where we could agree that this was the best thing for this foundation at this particular time." To some extent, this might have been easier for the Discount board than it would be for other foundation boards because all of its members are activists whose occupations and/or civic activities make it possible to address their "pet agendas" outside the boardroom.

In a spring 1997 paper outlining the new grant program, Chinn included an unusual tool - a mock docket. It included materials from prospective applicant organizations as well as some imaginary projects. This helped board members see the range of possibilities for grantmaking within the grant program, specifically that living wage and minimum wage campaigns would not be the only options.

A New Grant Program: Jobs and Living Wages for the Poor

The new Discount Foundation program's goal is to improve job opportunities, wages and benefits for poor and working people. The foundation board adopted the following program objectives:

• To empower poor and working people by strengthening their collective institutions - specifically, community-based organizations, churches and congregations, and labor organizations - and encouraging relationships among these institutions; and

• To advance innovative public policies designed to secure jobs with livable wages, benefits, and career opportunities for poor and working people.

The board's strategy of choice was to support new initiatives, conducted by organizations representing poor and working people and their allies, with promise for increasing jobs, wages and benefits. Secondarily, the foundation made a commitment to developing the infrastructure necessary to successfully expand citizen participation in economic decision making. Eligible activities include:

• Recruitment and training programs to develop new leaders;

• Staff and leadership gatherings to share strategies related to job and wage organizing;

• Increasing citizen participation in civic life, including accountability sessions for public officials; and

• Popular education, public policy development and research.

Despite excitement about living wage campaigns as a strategy, the foundation determined to support three different types of programs:

• Efforts to increase access to job opportunities, wages, benefits and job security (potentially including living wage campaigns);

• Projects to help welfare/workfare participants move from welfare to work with dignity; and

• Campaigns supporting individuals' right to join a union.

To take advantage of innovative work outside the foundation's traditional 14-state region (the Northeast and Midwest, reaching from Massachusetts to Wisconsin and Indiana), Chinn and the board decided that, in a few cases, proposals could be requested from outside it. In addition, the new program slightly increased minimum grant size, although grants are still relatively small, ranging from $5,000 to $20,000 per year.

The process Chinn uses to invite and review proposals has been streamlined, although the board continues to consider grant recommendations just once a year. In the fall, the foundation accepts one-page inquiry letters; from those, a small number of organizations are invited to submit proposals.

First Round of Grants

Within a few months after the Board adopted the program, public announcements were broadly released to potential applicants and other colleagues, and in March 1998, Discount's board awarded its first set of grants under the new program. From 310 initial information letters, 67 organizations were invited to submit proposals. Of those, Chinn recommended 24 grants totaling $360,000. Ultimately, in its first round of grantmaking under the new program, the Board awarded 27 grants totaling $405,000, the largest sum of awards in the Foundation's history. Among the grantees were:

• Arkansas Institute for Social Justice for the national ACORN organization to advance living wage campaigns in six cities. Another organization receiving a grant for work on this issue was the LA Alliance for a New Economy.

• Institute for Public Life to work with a Nebraska Industrial Areas Foundation-affiliated group (Omaha Together One Community), trade unions, parents of school-age children, and immigrant advocacy organizations to stimulate increased wages and job opportunities for the poor.

• Hartford Areas Rally Together (HART) in Connecticut to address employment needs of poor area residents through welfare-to-work strategies and efforts to stimulate new public and private sector employment options.

• Progressive Education and Research Associates, a community-labor organization for its work with several locals of the Hotel and Restaurant Employees International Union and community groups to educate the public about wages, working conditions and job security issues for hotel employees in Stamford, Connecticut.

Next Steps

From her experience with this first round, Chinn identified significant gaps. In the first round, there were "no far-reaching national public policy proposals addressing job creation, wages, welfare reform or the right to organize." No proposal addressed the issue of minimum wage. And, while all of the recommended proposals focused on low-wage workers, few focused on workfare participants.

With the first round of grants awarded, the Foundation's board and staff have some room to think about how they will assess the outcomes and impact of their investment. Staff and board members have a clear sense of what questions they hope to answer. In a spring 1997 paper, Chinn suggested using the following measures of effectiveness for assessing the future impact of foundation-supported organizations:

• Development or expansion of permanent organizations, particularly, but not solely, labor unions;

• Development of new relationships between institutions/ organizations that enhance the capacity of poor and working people to impact public policies regarding work and wages;

• Increased numbers of people mobilized on issues of work and wages; and

• New or increased media attention to jobs/wage campaigns.

Criteria for Grantmaking

Organizations seeking Discount Foundation funding must: Involve the people most affected (the unemployed, low-wage workers, welfare recipients) in seeking the solutions to problems related to jobs, wages and other work issues. Be connected to broader regional or national strategy for expanding job opportunities. Include plans for productive alliances with key organizations or institutions, labor unions, churches, academic institutions. Include low-wage and or workforce works as a primary constituency. Actively seek to enhance conditions for labor organizations. Promote public policy to create living wage jobs.

Discount's process for recognizing, collecting and documenting lessons generated from its funding are shaped by organizational culture and the foundation's size. Board member Margery Tabankin believes that assessing the foundation's impacts will continue to be an organic process. "Because the world we [all] work in is a network," she says, "It is not hard to discern results....We will know when something happens, particularly the victories....It does help when you have an activist board that's plugged in."

As for communicating its experiences with the program, Discount will use informal channels. Garland Yates explains, "When opportunities to share with others come up, Sue is encouraged to do that....We want to make sure that whatever we learn is available to others, but the board doesn't want to be real public. It's not that we don't want people to have access, it's that we don't have a lot of money to get into [producing] a lot of publications."

Chinn has not yet determined exactly how the foundation will handle evaluation and communication. Although Discount has not produced much in the way of written documentation for the public, Chinn says she may create a compendium of the organizing efforts it supports in order to "tease out the lessons learned, best practices...."

Marge Tabankin summarizes Discount's philosophy about its role in philanthropy this way: "The fact is that as a country we still too easily overlook the lowest 25 percent of the economic stratum. We come from a place that says that [this] 25 percent should be taken care of as well, and if that can happen in a way that is self-reliant that is even better." She describes Discount's work as helping to create a sector that supports this 25 percent's ability to participate in the democratic process. "Once they do," she says, "their lives will never be the same."