Constellation Fund Uses Data-driven Approach to Philanthropy

The Constellation Fund Off Site Link is maximizing the use of a powerful tool in the fight against poverty: evidence.

The Minneapolis-based nonprofit is focused on moving the philanthropic sector towards “bright giving,” a strategic approach to investments in education, employment, health and housing.

The organization was started by Andrew Dayton with a vision for improving the impact of philanthropic investments, including his. The Constellation Fund raises money from the community to be invested in local nonprofits in the Twin Cities. But here’s where the Constellation Fund breaks away from the traditional philanthropic paradigm: the organization decides where to invest donor funds based on a rigorous analysis of potential grantees by developing benefit/cost ratios alongside on-the-ground insights from the community.

The Constellation Fund, with input from local experts and economists, works to evaluate a nonprofit’s programs using existing data and client demographics, among other things, to find what evidence says is likely to have the most impact in the lives of people living in poverty.

According to the Constellation Fund, grantees are projected to turn every dollar invested into at least $5 of poverty fighting impact. Currently, Constellation has 31 grantee partners including The Link Off Site Link, Wallin Education Partners and Lutheran Social Service Off Site Link.

“There is a role for philanthropy to invest across the broader nonprofit landscape and its varied approaches, especially during a time of unprecedented challenges like this one,” said Dayton. “Constellation plays a specific and necessary role within this broader approach: to use the best available information to identify and holistically support nonprofit service providers with the potential to create transformational impact for those in our community who need it most.”

The Constellation Fund is modeled after the Robin Hood Foundation in New York and the Tipping Point Community in San Francisco. While the idea of smart giving isn’t unprecedented, the Constellation Fund is the first of its kind in the Twin Cities, said Dayton.

Dayton added that while the model is an involved process, he hopes to see it replicated.

“We are focused on building a powerful and useful tool for the community. The process of estimating the poverty-fighting benefits associated with a given program is complex and requires the careful adaptation of each metric to meet the specific characteristics of and available information on the program being evaluated,” said Dayton. As we continue to evaluate more organizations and learn from the process, we hope to share learnings that are useful for the entire community — nonprofits, donors, business leaders and policymakers.”

The Constellation Fund’s governing board, which includes an impressive group of leaders across business, philanthropy, higher education, research and direct service, covers all operational and administrative costs, meaning that every dollar donated to the organization by individual community members goes directly to the nonprofits it supports.

According to the Constellation Fund’s website, there are more than 650,000 Twin Citians living in poverty; there are also marked disparities among race – for example, Black residents are nearly six times as likely to be poor than their white counterparts.

“Philanthropic resources are precious, in that they are truly the last unearmarked, apolitical dollars invested in our communities,” said Dayton. “In that sense, philanthropy has a unique ability to find and scale the best approaches to our society’s most vexing challenges.”

Learn more about the Constellation Fund’s metrics Off Site Link and how to apply for funding here Off Site Link.