The following is a conversation between Tonya Allen, President of the McKnight Foundation, and Denver Frederick, the Host of The Business of Giving.
Denver: The McKnight Foundation is a Minnesota-based family organization committed to a future where both people and planet thrive. It addresses key issues like climate change, racial equity, and community enrichment in the Minneapolis-St. Paul region and beyond.
And to discuss their work further, it’s a pleasure to have with us, Tonya Allen, the president of the McKnight Foundation. Welcome to The Business of Giving, Tonya.
Tonya Allen, President of the McKnight Foundation
Tonya: Thank you, Denver. I’m so excited to be on The Business of Giving. You’ve done such amazing work with so many great guests before, so I feel very honored to be with you.
Denver: Well, I’m the honored one, for sure. For listeners unfamiliar with McKnight, share its founding story and some of the pivotal moments in its history.
Tonya: Yeah, sure. Happy to! So, McKnight Foundation, we’re turning 70 next year. And so we are a family foundation that was started by William McKnight, who was the president of 3M.
But what’s so cool about his story is that he actually started in the mailroom and worked his way up to CEO and grew 3M into a global company. And so he established McKnight as a family foundation.
And today, we have our fourth generation of family members who serve on the board and who continue to help steward these resources on behalf of the communities we care deeply about.
“And so the way that we think about climate action and racial equity is that these are our headlines, like: this is where we’re putting our resources. These are the things that we care so deeply about. But they’re also our throughlines. They have to show up in literally everything we do.”
Denver: I always love a story of the evolution of someone from the mailroom to the C-suite. And McKnight’s done a lot of evolving itself to more effectively integrate and address those intertwined issues of climate action and racial equity. Tell us a little bit about that.
Tonya: Yeah, so in 2019, the foundation made a commitment that those were going to be our two largest program areas. And as a result of that, we actually shed some of our program areas. We sunsetted them.
And so when I came on board, my job was really to basically manifest what people said and bring it into existence. And so the way that we think about climate action and racial equity is that these are our headlines, like this is where we’re putting our resources. These are the things that we care so deeply about.
But they’re also our throughlines. They have to show up in literally everything we do. If we really value these as the principles or the highest expression of our mission, it’s that integration of the two of them.
So in everything that we do at the McKnight Foundation, we’re asking our question: How do we exhibit the highest expression of mission? How do we make sure that this effort, if we’re going into a new building we’ll be in probably in the next year, that building is going to be fully electric, no carbon out.
Or we look at our team and our staff. We want our staff to be highly qualified, diverse, people with different lived experiences because we believe that that actually helps us create a more just and inclusive society. So we just try to bring all of those pieces into all of our work, and that’s how we’ve been thinking about it.
And more recently, the foundation just made even a deeper commitment to those two priorities. We’ve made an investment, which we call our mission boost, which is more than just our average kind of 5% payout, that we’re going to pay out some pretty significant resources in the next five years to help advance those priorities. That’s how serious we are about them.
Denver: Oh, that’s fantastic. And I love the expression headlines and throughlines, and it may be stolen, if you don’t mind.
Tonya: Go for it.
Denver: It’s a great concept. Well, on October 31st, Halloween, the GroundBreak Coalition announced nearly a billion dollars in capital commitments to build up Black wealth and close a racial wealth gap in Minneapolis-St. Paul. That is quite a milestone.
Can you provide, Tonya, an overview of the GroundBreak Coalition and more about its core objectives?
Tonya: Yeah, so I’m happy to. It was a big announcement. And what’s so funny about that announcement, most people would be standing and cheering for a billion dollars, and all I kept thinking was like: we still have $ 4 billion to raise.
Denver: You joined for a nanosecond.
Tonya: Right. Yeah, for a nanosecond. So what I would say: GroundBreak was really about this coalition formed around this question: What would it take for our community, our region, to go from like the epicenter of racial harm, with George Floyd’s murder, to what would it look like if we went to the epicenter of racial opportunity and belonging?
And so we talked about what was needed in order to do that. And when we looked at all of the programs that we’re trying to deal with, like the wealth gap and to help families who had these deep aspirations across the continuum– white families, Black families, indigenous, Hispanic, Asian… We were looking at the whole spectrum. What would it take?
And one of the things that we heard, particularly from people of color quite often was that we don’t have access to capital. Like, even when we go to try and get capital, we have barriers in front of us that don’t allow us to do that. So we asked our community, Is this a question? This challenge or barrier, do you want to try and solve it?
And people said yes. So we pull together financial institutions, corporations, foundations, government, nonprofits, and said like we’re going to try and tackle this problem. Went to work on it for about 18 months to try and design the solutions.
And the solution basically was like we know that this has to be a universal goal. We want every person in our community to be at 70% of home ownership. White families right now are 77%, so we don’t need to target their efforts. But how do we target those who are a little bit further behind?
And what we found is that Black families were at 20%, and that they actually have been decreasing every decade over the last five or six decades. So what would it take if we serve these sets of families really well? What will we learn about how to support Hispanic, Asian, indigenous families? So that’s the notion of targeted universalism around the approach.
And basically what GroundBreak is, is establishing a new financial platform, Denver. And that platform is basically getting people who have capital, like financial institutions, banks, foundations, and government to deploy and use that capital in a different way. And basically, put the burden on us to organize the money so that when people come in to get an access capital, they’re not jumping through hoops because we have so many different rules.
So the first thing in GroundBreak is rule changes. So all of the banking institutions have agreed to do a special purpose credit program, which provides the best and most competitive rates you can have for these families. And that rule is allowed because these are the families… the Federal government says these are the families that have been discriminated by banking institutions. So you can change the rules to serve them even better.
The second is that we got to have some equity. So we have to help people with some equity. How do you show up to buy a home with a little equity? What’s your savings? What can we provide in terms of home down payment assistance or for your business, et cetera? So what is that little extra boost that can help us repair and accelerate closing these wealth gaps?
And then the third is really, we know that many people who might have less income or maybe not have a ton of wealth, that they don’t really have collateral. And so part of that is,… so that prevents them from accessing. It doesn’t mean that they’re more risky. It just means they don’t have collateral.
Denver: Yeah.
Tonya: And so what we’ve decided to do is to put together a pooled guarantee fund that actually will allow families to rely on these institutions to help them make that next step. So these people have to do all of the hard work, right? Like they got to do all of the same things that we all have to do, but how do we give them a little bit of a nudge to be able to help?
And then the last one is low-cost and patient capital. We have projects that sometimes may not bring in a market return. If they’re not bringing in 7%, but they could bring in 5%. So how are there people who have wealth or who have capital, who are willing to take a little bit of a haircut, to be able to extend that capital in a way that actually does good, not just for these individual people, but does good for our community?
Because if everybody owns, if everybody’s engaged, we all thrive, right? We increase the pie in our region, and we create the kind of, what I would say a force multiplier in our economy. And that’s really what GroundBreak is about.
“But what I would often say is that every rule that’s in place, humans have created. So therefore, we can create new ones, and we can redirect the flow of energy, the flow of money, the flow of opportunity. And I think what our goal is, is to make sure that opportunity is for all families. We want everybody in Minnesota to thrive.”
Denver: Oh, that’s a great explanation. I love two fundamental elements of that. Number one, which we probably don’t think about enough in the sector, is to change how money flows. And that can solve, or at least begin to address so many different challenges.
And the other thing that really stuck out from what you said was rewriting the rules. Talk a little bit more about that. I know you’ve been a big believer. We often want to just get to the problem. But if you were to back up a little bit and say: What are these rules that have been around?
Tell how you deal with that and the transformative impact that that can have.
Tonya: Yeah. Well, one of my favorite definitions of power, Denver, is the ability to rewrite the rules. And I think that a lot of us sit in powerful positions and don’t ever think about how we’re rewriting the rules. How are we shifting and changing the rules to solve the problems that we’re looking at?
Now many of us sit in these leadership positions and we kind of do workarounds. And they work around, and they may work, but just for a short period of time, or we end up propping up an entire industry to do workarounds.
And I think if we really want to solve some of these challenging problems in front of us, like the climate crisis, like the challenges we as a country have had with race, then it means that we got to just shift these rules.
And so, part of what McKnight’s whole premise is, is that we’re trying to be system change funders. That means that we’re trying to get systems to rewrite their rules so that you actually enable the outcomes that you really want to. And sometimes that’s kind of like reverse engineering, and sometimes that’s really like throwing things out and restarting.
But what I would often say is that every rule that’s in place, humans have created. So therefore, we can create new ones, and we can redirect the flow of energy, the flow of money, the flow of opportunity. And I think what our goal is, is to make sure that opportunity is for all families. We want everybody in Minnesota to thrive.
Denver: Exactly. No, those rules are the assumptions we work under, and we feel you can’t touch them… as if somebody that came down from the mount and they… but once you go after them, everything can change.
As challenging as it was to raise this fund of a billion dollars, you said even more challenging was fundamentally changing the institutions themselves. Tell us about that work and how you approach it, Tonya.
Tonya: Well, we started off with: Are you willing to change? So this is not… one of the things we talked about a lot was: we’re not trying to raise a fund. We’re trying to create fundamental change. So if you want to join us, that means, no, we’re not telling you what the price is to come in here and to partner, to be a part of this.
What we’re asking is you have to bring your intelligence. We want you to bring your business interests. We want you to have your business imperatives that are sitting in front of you, and we want you to change your rules or the way that you function…. that’s advancing your business imperatives and also advancing these societal needs.
And so I think that was a big part of what we were, how we were able to accomplish. It’s not an add-on; it’s not just a charitable contribution. And then I would also say the second thing is through relationship. Like we know that you never get to the results you want unless you have relationship.
And so part of what we really try to do through GroundBreak is even though we have these really diverse and cross-sector partners being there, how do we get in relationship with each other? How do we work together on projects? How do we actually get to know each other a little bit so that if Tonya’s not doing what she’s supposed to do, I know I have to look Denver in the eye, and Denver and I have to be accountable.
And I think that’s part of what we’ve been trying to accomplish, is to bring all of those things together, which is all about having this strong civic muscle, which I think Minneapolis and St. Paul, the Twin Cities, has always had. But if you don’t use it a lot, it atrophies, and I think what GroundBreak is trying to do is to like strengthen that muscle and to exert it.
Denver: Yep. Well, I think it’s a great insight. I believe too many times when people get together, they want to get a common set of objectives, and I’ve always advised people I work with: No, start by getting to know each other with no set of objectives. It takes some time.
And if you build those relationships, you’re going to end up in a much, much better place. And speaking of change, McKnight’s really changed, I guess, from a grantmaker to a changemaker, would that be correct?
Tonya: Yeah. Yeah. We’ve been trying our best to make these shifts. And let me just say, I think that McKnight Foundation has made change in the past for a really long time. Like we’ve done extraordinary work.
But this is really about taking these attributes of changemaking and making them as important as our grantmaking. So a lot of times, I think philanthropic organizations, foundations in particular, like we think our main and only asset is our grant dollars, or our capital that we give to others.
And I think that we sit in such a privileged position as these institutions; we have the smartest people in the world who are telling us things, about what the findings, the learnings, et cetera are. And then, that comes from these thought leadership positions.
And then we have the smartest people in the world who are working on the ground. They’re learning from doing; they’re learning about the challenges, et cetera. We get to learn that. So we become this kind of repository of all of this knowledge and information. We understand the ecosystem in a different way than most actors and most players do.
So what does it mean if we have all of these assets in addition to our endowment, right? In addition to our facilities, all of these different things, how do we deploy all of that for the good? How do we use all of our assets in a way that actually advances our mission?
And so what we are doing at the McKnight Foundation is lifting that up as important tools and resources as our grantmaking dollars. And that gives us this kind of changemaking function where people go and look, not thinking about: how do I make a grant, but how do I make a deal.
How do we create a structure, a system that actually can move the needle on the things that we care deeply about, versus kind of thinking about them as an individual or even just a small portfolio of grantmaking.
“And for me, I’m just not trying to be perfect. I want to make change. Like I want that, so I’m okay with failing and flopping on some stuff. I’ve had great successes in being bold, but I’ve also had failures in being bold, and that’s okay with me because I think the risks are outweighed by the return. And so I think if we can step into that, that really helps.”
Denver: Yeah, you have a really unique perch. I was speaking to Richard Buery yesterday from the Robin Hood Foundation and what some organizations like yours have, you have this 360 view that few other people have to use as an asset.
McKnight and you, I guess as a leader, you’ve really grown in your boldness in terms of what you’re trying to do. And I’ll always be curious, how can a leader be bold, but also be collaborative, and particularly when you’re dealing with some contentious issues? How do you think about that, Tonya?
Tonya: Well, that’s a great question. I would say, I think on collaborative, I think it’s really easy. My grandmother always said, None of us is as smart as all of us. And I just kind of live by that, right? Like I’m just always thinking that together we are smarter, so that’s just a principle which I operate on.
So, any bold thing that I’ve actually done has been dependent on all of us being smarter than me. So like I am reliant. I think the foundation is reliant on understanding that we have a lot of people who… like we have a unique perch, but there are other people who have parts of the picture, parts of the puzzle pieces that they can add to that.
And so that actually gives me a deep amount of confidence that we can solve things together, especially if we do it by bridging, meaning like we are having different and contentious voices in the room. Like everybody ought not agree. Like if we all agree, then we’re highly likely never to solve the problem.
So we got to have people who are going to come with a different point of view. They’re going to have a different lived experience; they may have a different political view, or they may have just a different way of thinking about solving the problem. Like that pressure, that tension in a creative way gives us better solutions.
And what I found is like in terms of boldness, that most people are afraid of risk. And in philanthropy, I think we all want to protect our reputation. We want to show up as the smartest and the brightest in the room, and that’s a bit of perfectionism.
And for me, I’m just not trying to be perfect. I want to make change. Like I want that, so I’m okay with failing and flopping on some stuff. I’ve had great successes in being bold, but I’ve also had failures in being bold, and that’s okay with me because I think the risks are outweighed by the return. And so I think if we can step into that, that really helps.
And then the last thing I would just say is that personally, I am a Christian woman, and I always think to myself like if you have a safety net…. and I believe that God is my safety net, then why am I afraid to jump?
Denver: Right…
Tonya: So that’s what I kind of bring to it too, Denver. It’s like, you know what, let’s go for it.
Denver: Yeah. You’re right. Well, I’ve always said that risk is the four-letter word of the sector, and it is absolutely extraordinary how we never even talk about it. Even when people give grants, you never talk about: what are the chances of this succeeding? We kind of just sweep that under the rug, I think, too much in the sector.
Certainly, if I went to my investment advisor and he gave me 10, or she gave me 10 stocks, they’d be telling me which ones were risky or not. It’s a normal conversation. And I’ve also noticed… not that I’m a great investor, often you only have to have one of those 10, like a Facebook early on come through or a Google, and the other nine go bankrupt.
And I always think that with risk, it’s like, well, you don’t even have to get 50. If you get one of these 10, you can change the world. So get out there and try to do it.
Finally, Tonya, let me close with this. In light of all the recent societal changes that we’ve had, what do you see the role of philanthropy… how is it going to transform… the role of philanthropy… and what implications does that have for the future of the sector?
Tonya: Yeah, I would say, well, I think a couple of things. I think that one, philanthropy can no longer rely on this good reputation. I often say like we assume that we hear the word “philanthropy,” that means good.
Denver: Yeah.
Tonya: Right? Like, no, it just means that we’re distributing grants. It doesn’t mean that we’re doing it for the good. And so I often think about it is time for philanthropy to lean in on the good. And I would describe that as kind of like radical love, which to me is about… like the root word of radical is actually: get to the root.
And love is anchored in philanthropy. It’s the love of mankind. So how do we bring those two together in a way that really helps us be bolder, to show up in different ways, to actually have like a laser-light focus on getting to outcomes because we care about the people, and we want to get to the root causes. Like bringing that together through system change, et cetera, I think is a big part of it.
And then the second thing I would say is I think every philanthropic organization in the world is going to have to become a climate funder. And this is what I mean by that. Like you, we saw in this movement for many years in philanthropy, where we saw like everybody needs a DEI statement.
Some organizations even have DEI’s chief diversity officers. We all have kind of, not all, but many of us have said like this is a throughline that we need to see in our organizations. And even though we might not be a racial justice funder, or we might not be a whatever funder, like you can figure out how to do it. You can bring that into… if you’re a health funder, a housing funder, if you are a higher ed funder.
And I think that’s the same thing around climate. As foundations, we have to bring that into everything we do because I would say this: we often think about our perpetuity, and I would say, “What does perpetuity matter if you don’t have a planet,” right?
Denver: Mm-hmm.
Tonya: And so we all have to show up in that, all of our grantmaking. I don’t care if you’re a housing grantmaker or a workforce development grantmaker. Whatever you may be, you need to bring a climate lens through that work because the issue is just becoming more urgent, and we need to show up, helping our society move into a clean energy and equitable future.
And I think we are capable of doing that, and I think that is going to be the next push. And it’s going to require us to show up and think differently. Think differently about how we make investments from our corpus as well as our grantmaking. And then even our own carbon footprint, how do we reduce that?
Denver: Mm-Hmm. Well, there’s not a single organization out there, if they take five minutes and think about it, that will not be able to come up with ways that their organization is being impacted by the climate.
Tonya: Yes.
Denver: It may not be self-evident. Take five minutes, you’ll find how it’s impacting your work now and how it’s going to profoundly impact your work, not for the better, in the future unless you do something.
For listeners who want to learn more about the McKnight Foundation, tell us about your website, Tonya, and what visitors will find there.
Tonya: All right. Well, you can visit us at mcknight.org, and you’ll find amazing stories about some of our partners who are doing amazing work. You’ll also understand and learn more about our grantmaking. And if you want to be our partner, you’ll have an opportunity to apply.
Denver: There you go. Well, thanks so much for being here today, Tonya. You’re a wonderful guest, and it was a pleasure to have you on the program.
Tonya: Thank you so much. It’s my pleasure.
Denver Frederick, Host of The Business of Giving serves as a Trusted Advisor and Executive Coach to Nonprofit Leaders. His Book, The Business of Giving: New Best Practices for Nonprofit and Philanthropic Leaders in an Uncertain World, is available now on Amazon and Barnes & Noble.