Frances Messano wants her organization to nurture promising, diverse talent within school districts — and within the education companies that serve them.

Messano is in her first year as president of NewSchools Venture Fund,  a nonprofit venture philanthropy that accepts charitable donations and invests the money into schools, organizations, and private education companies.

NewSchools focuses its investments on early-stage companies, and provides them with guidance and support. Helping underserved communities is a core tenet of its work.

Earlier this year, the organization announced plans to invest $100 million in four investment areas that promote diversity, equity, and inclusion in schools and among entrepreneurs.

Those four areas are nurturing diverse leaders, which includes supporting Black and Latino educators in school districts; promoting innovative school designs and learning environments; backing learning solutions, or efforts to support early-stage entrepreneurs; and supporting racial equity through investments that fall outside the other three priorities.

NewSchools unveiled those four focus areas in January, at the same time the organization announced the appointment of Messano as president. It was a newly created position in which she works with CEO Stacey Childress and guides all the organization’s investment areas.

Even before she took on her new role, Messano has taken a strong interest in the struggles of minority entrepreneurs to secure venture capital. She authored a report for NewSchools on the topic two years ago, and says it will be a priority for the organization.

EdWeek Market Brief Managing Editor Sean Cavanagh spoke recently with Messano about how her organization is trying to foster diversity within the industry through its investments, and what it will take to make progress across the broader K-12 market.

What was the overall thinking behind NewSchools Venture Fund’s plan to invest $100 million in these four investment areas?

Our new approach allows us to go deep on on work supporting diverse innovators with vision and skills, with new momentum, while erasing boundaries and focusing throughout our investments on the vital question of who leads the work. Some of the investment areas of focus you’ll recognize—innovative public schools and diverse leaders will continue to be central to our work.

We’re funding early-stage education innovators. What that means is we’re funding people who are creating new schools, in both charter and district contexts. We are funding organizations that are creating new learning solutions. That’s where our ed-tech work has sat–more for-profit companies. We are funding the creation of diverse leadership pipelines, so we can make sure there are Black and Latino leaders at all levels of education. And then also funding the creation of diversity, equity, and inclusion capacity-builders–such as service providers–people who are working directly with schools and systems and other education organizations to become more diverse, equitable, and inclusive.

How will the investment in racial equity play out?

In our racial equity work, what we learned from our diverse leaders portfolio over time is it’s important to have a cross-cutting priority on diversity, equity, and inclusion, but it’s also helpful for us as funders to have a direct focus on an issue where there’s a need, where we need to shine a brighter light. To be able to focus on diversity in a cross-cutting way, but then fund against it, we’re actually able to influence the field more, through other education partners, other foundations.

How will you make investment decisions with the new racial equity fund?

We are intentionally going to have a broad-based fund. And we’re going to use participatory grant-making, meaning we’ll have a steering committee of 15 individuals, innovators outside of our portfolio, including parents and students, to decide how that money gets allocated. Because our belief is, if racial equity is seeding power and making sure it meets the needs of students and families, we need to have a representative committee making those decisions.

We don’t know what ideas will come to us–because we’re going to have an open funding opportunity. [But] when we were doing the planning work, the kinds of ideas coming up seemed to be anti-racist curriculum, culturally responsive curriculum, youth leadership, more of a focus on social-emotional supports for students, as well as efforts to rethink school discipline.

What are some of the most essential kinds of support this funding will provide to founders of early-stage companies?

There were a number of trends and themes that kept coming up from innovators of color. One is that we have all these ideas of how work should be done differently to create a more diverse and equitable system, but we can’t find the funders. Basically, the parameters of a funder strategy don’t allow for that innovation to take root. They felt they had to sit in particular molds and ways of doing that work.

Are there areas where the K-12 market continually falls short, in supporting minority entrepreneurs?

We’re incredibly fragmented and segmented in terms of the work that’s done. You think about different companies–everyone has their own area of expertise and focus. But we’re not seeing a range of integrated solutions that are going to meet the needs of school systems so they can be on a journey to create more racially equitable experiences for students.

When I think of the work of curriculum providers, some might say, “I’m going to give you great, strong math curriculum.” But they’re not necessarily thinking about how to make sure that curriculum is culturally responsive–bringing the experiences of a diverse range of students and communities.

As you’re thinking about teacher professional development and support, you can focus on content. But it’s also about engaging students who might have a different race or ethnicity than you–how are you making sure you’re spending enough time on the engagement strategies to make sure it’s going to meet the needs of all students?

Does this lack of cohesion hamper diversity in the market in other ways?

I find [this fragmentation] even with diversity, equity, and inclusion service providers. You might have someone who could say, “I’m really great about doing an audit of your system to help you understand the approaches that will work today, and where you can grow your support.” But the people who are great on implementation might be a different group of folks.

We need to make greater levels of progress in thinking about wholesale solutions that school system leaders can engage in, and can address some of that silo-ing that exists. Because I find that system leaders are often having to bring together a patchwork of solutions.

What kinds of education companies do you envision NewSchools supporting through its racial-equity work?

There are early-stage innovators of color who are saying, “I have this area of what can work differently in school systems around the country, but I haven’t really found the opportunity to get funding for it.”

We typically fund people who are in year zero through year three of developing new ideas, who might not have been able to get ideas off the ground. Because we’re using participatory grantmaking, that decision’s not up to us. It’s up the individuals on the decision-making committee.

But based on our learning solutions work, we’re going to fund people who are going to create new tools, new subject-area approaches, new ways of doing school entirely. I imagine we’ll have new curriculum companies or schools that feel they’ve figured things out and want to scale. We’re actually launching a funding opportunity focused on literacy solutions, specifically, where we’re hoping to have those sorts of players share their ideas for us for supporting literacy in a more equitable way.

You’ve done research on why entrepreneurs of color don’t get backing from investors. What do you see as the best ways to tackle that problem?

This is an issue that’s been getting a lot of focus recently, which I’m excited about. Number one, there’s a lack of understanding of both philanthropic and investment capital. When we asked entrepreneurs, “Are you familiar with the top 10 education funders,” less than 50 percent of them knew who the funders were. Just a third had reached out to get any capital at all. Part of it is a lack of understanding of who’s funding and how do you get access to the funding.

A lot of the questions we’ve seen coming up [from these company founders] were along the lines of, “Is that funder looking for someone like me? Do I fit the mold?” When you think of entrepreneurs, innovators, there’s typically an image that comes to mind. It might be someone who identifies as white, someone who’s male, who’s gone to a particular school. There’s some belief that, “You’re not looking for me in the first place.” There’s some opting-out.

How do you conquer those barriers?

What we’re hoping to do–and see others do–is figure out how we let people know we’re looking for diverse innovators. We’re looking for people who have fundamentally new approaches and new ideas. We’re not just trying to replicate what others would see as tried-and-true best practice. What we really believe now, as everyone is navigating the pandemic, and thinking about systemic racism in our system, is that we need new combinations of best practice or fundamentally different solutions.

It’s on us as funders to build pipelines of leaders in communities we might not be in touch with already. It requires capital providers to think differently about how they’re choosing who to fund. We believe diverse innovators are going to help us figure out what the work is that needs to be done, and how.

And I’m assuming you see broader benefits in entrepreneurs of color bringing new solutions into schools.

You have to look at our main customers in the education system–those who are the least well-served.

There is a distrust, a mistrust of education systems right now. We’re seeing this during the pandemic, [with parents asking], “Are leaders going to do what’s right for my kids?” There’s a lot of research that’s shown that if a student being taught by a teacher who shares his or her racial or ethnic background, academic results go up, suspensions or referrals go down, students are developing greater aspirations for themselves. There are all these benefits that accrue when we have diverse leaders in place.

Participatory grantmaking: It isn’t a term that rolls off the tongue, and yet many people in the philanthropy world are talking about it these days. It describes the process of including community members in grantmaking decisions. As GrantCraft put it in a 2018 report, “participatory grantmaking cedes decision-making power about funding—including the strategy and criteria behind those decisions—to the very communities that funders aim to serve.”

Participatory grantmaking isn’t a new idea, but growing awareness of inequity and racial injustice have raised its visibility in recent years, as IP reported in an in-depth article last year. A new book, “Letting Go: How Philanthropists and Impact Investors Can Do More Good By Giving Up Control,” makes the case for participatory grantmaking, as IP recently reported.

Now, a major education funder is taking the participatory grantmaking plunge. When the NewSchools Venture Fund rolled out its new Racial Equity funding opportunity, President Frances Messano announced that community members would be guiding the selection process. “For the first time, we’re ceding power,” Messano wrote in a blog post. “Instead of a traditional grantmaking approach which centers funders, our strategies, ways of seeing the world and selection criteria, parents, students and education innovators of color will be the decision makers. They—not us—will determine how to allocate the funds in this portfolio.”

Dream capital 

The new funding opportunity marks several firsts for NewSchools, which is supported by several major K-12 funders, including the Walton Family Foundation, the Chan Zuckerberg Initiative and the Gates Foundation. Racial justice has always been a priority for the organization, but it recently announced Racial Equity as a separate investment area, and simultaneously appointed Messano, a woman of color, president, as IP previously reported. The new initiative is NewSchools’ first within the Racial Equity investment area. According to the announcement, NewSchools “will provide $1.5 million in ‘dream capital’ to innovators of color with bold ideas to advance racial equity in education.”

Messano explained that NewSchools made the Racial Equity initiative “intentionally broad” to encourage fresh, out-of-the-box thinking: “Rather than narrowly define the parameters of what we will or won’t fund (an approach that often constrains innovation), we are open to supporting a range of ideas as long as it is outside one of our other investment areas. There are brilliant solutions borne from the lived experiences of people of color, and we believe these ideas will help us get closer to a more just and equitable education system.” Half the allocated funds will go to Black educator leaders.

Creating a bigger tent

What makes NewSchools’ new initiative particularly noteworthy is its participatory approach. NewSchools has created a council of 16 people, including students, parents and education leaders of color from around the U.S. The council will be in charge of developing the investment criteria, reviewing applications and allocating funds.

As Frances Messano told IP earlier this year, “We believe we need to expand our tent in education, where sometimes, we can have a little bit of an echo chamber in that we’re talking to people with the same ideas… We know we can benefit from those who are more proximate to the issues themselves.”

The council won’t be operating in a vacuum: NewSchools will provide ongoing support, along with parameters within which the council will work. But the council will hold the decision-making power in the grantmaking process, a distinct difference between, for example, soliciting feedback or holding listening sessions. The council has final word on who receives funding and, because of the size of the grants involved, does not need board approval. The only exception is that the president has the power to veto a grant if it isn’t in line with the fund’s 501(c)(3) mission and eligibility criteria. According to NewSchools, they don’t imagine that being an issue, given the nature of the process they are designing for the lead-up to the application review.

As its first foray into this new territory, NewSchools considers the initiative a learning opportunity that will identify best practices and information on how to improve the process going forward.

Disrupting philanthropy

Process issues in philanthropy typically don’t get as much attention as what’s getting funded and why, but participatory grantmaking, if widely adopted, could shake up the staid world of philanthropy. As the GrantCraft report observed: “The bottom line: Participatory grantmaking is a lever for disrupting and democratizing philanthropy.”

It’s also no small commitment. In a 2017 Ford Foundation report, consultant Cynthia Gibson underscored the challenges of adopting a participatory grantmaking approach: “Moving this kind of change—within organizations and across the field—requires boatloads of sweat equity, research, testing, and intellectually and operationally rigorous field-building.”

But some believe participatory grantmaking is less of a choice than an obligation—and a way for philanthropy to act on the democratic principles it champions. In a recent article in Nonprofit Quarterly, Josh Lerner, who heads People Powered, urged philanthropy to make, “a deeper investment in participatory grantmaking, moving beyond information sharing and consultation. Being pro-democracy requires more than poetic blog posts and earnest listening sessions. Participation without power is tokenism. It’s time for funders to share real power over real decisions to support democracy.”

Is participatory grantmaking the wave of the philanthropic future? According to NewSchools President Frances Messano, we’re not there yet. “Foundations are starting to think about how they might engage a broader set of community members to influence their grantmaking. We’re seeing increased comfort from funders in getting input and feedback from proximate leaders to inform their strategies. However, we haven’t seen as many funders embrace participatory grantmaking because it cedes all power and decision-making to those outside of the institution. We are far from seeing participatory grantmaking as the norm or standard.”

Note: The deadline to apply for the Racial Equity Funding Opportunity was June 4, 2021 at 11:59pm PDT