Schafer: A Dayton brother tackles a new horizon, efficiency in philanthropy

Social scientists have so thoroughly proved that people make charitable donations based on emotions rather than carefully thinking about impact that they have probably moved on to more interesting stuff.

The founder of the Constellation Fund in Minneapolis, Andrew Dayton, said he knows about those studies, too. Yet for him, the debate is not over.

The nonprofit he launched is built on the notion that relying on objective evidence is the way to direct money into the most promising programs to fight poverty in the Twin Cities. He has made enough progress that it's time to take this approach very seriously — as donors.

The Constellation Fund is not a traditional foundation with its own money. It is more of a pass-through, a nonprofit that directs donor money to what Constellation has concluded are the most effective nonprofits.

All the overhead is paid for by the board of directors, so all 100 cents out of each dollar goes into the work, about $3.3 million in the fiscal year that ended last June.

The Constellation Fund isn't exactly a Minnesota invention, though. Dayton, who in addition to cofounding the apparel firm Askov Finlayson with his brother Eric, worked for a time in San Francisco, including in the mayor's office. There, he learned about Tipping Point Community, a nonprofit that got its start in 2005.

Tipping Point was formed to "advance the most promising poverty-fighting solutions," as its mission statement now reads. A similar organization called Robin Hood Foundation operates in New York.

One challenge for the model, in San Francisco or here, is correctly spotting the most promising programs. The data Constellation need do not really exist in the nonprofit community, Dayton said, not nearly enough of it anyway.

Even small nonprofits are careful about recording how many people they serve, how many training programs they conducted or how many pounds of food left their food shelves. But the totals will rarely say much about what happened in the lives of the people served.

Dayton described once talking to his dad, former Gov. Mark Dayton, who wasn't that interested in how many procedures a surgeon at Mayo Clinic might have performed. He wanted to know how many of the surgeon's patients had fully recovered.

To see what works to generate the best outcomes, the fund turns to research findings of economists and others at universities, think tanks and government agencies.

The kind of evidence that would be perfect would be the conclusions of a study that followed the same people for 30 years. In that case, researchers would really know that a program after school for teens back in the 1990s had worked, based on healthy, middle-aged parents today compared to a similar cohort that didn't get into such a program back then.

But one of the points that Dayton made several times is that it can't wait for the perfect study.

One of the nonprofits that has received Constellation support is the Ostara Initiative, which has developed a program in Minnesota and Alabama to teach parenting skills to women in prisons and jails who were pregnant at the time they were incarcerated.

The research Constellation relied on when making its grants didn't come from Ostara and it didn't even focus on the moms. The outcome that really mattered was what happened to their kids.

From one study Constellation knew that low-income women who had received the help of a doula before and after the birth of their child were far less likely to have a baby born preterm or with a low birthweight. From that study the Constellation staff was able to predict how many fewer low-birthweight babies would be born if this kind of coaching were available to those serving time.

Another study took a very long view, showing how kids born underweight don't do as well as other kids as they mature, go to school and eventually join the workforce. Apply some math, and Constellation can take a stab at the total impact years down the road from the funding going to Ostara.

"It kind of gave us a different way to look at it, too," said Raelene Baker, director of Ostara's Minnesota Prison Doula Project. "We're going into the facilities every week, and we were giving the parent education knowing that it helped in that moment, right now, while they're parenting. But we weren't necessarily thinking about how it affected the child while they grow."

There's probably not a chasm between the process that led to funding for Ostara and what happens at many foundations, which have staffers savvy about policy choices and who know how to find third-party data. But evidence-based decisionmaking is a core part of Constellation.

One of the first advisers who jumped aboard Constellation to help figure it out was Aaron Sojourner, labor economist and professor at the University of Minnesota's Carlson School of Management. Others serving on Constellation's advisory council include Federal Reserve Bank of Minneapolis economist and director of research Mark Wright and economist Abigail Wozniak, director of the Minneapolis Fed's Opportunity & Inclusive Growth Institute.

And it's just not easy to know with certainty what has worked best in charitable organizations, Sojourner said, "and very hard in social science in general. You can't be sure because you can't see what would've happened if you gave [the grant] to somebody different."

One thing that does show this approach is working, he said, is growing donor interest in the whole idea of using data to make decisions.

Giving money to charity should be a good experience, Dayton said, satisfying a donor's sense of moral obligation or for any other reason. Using studies and data to allocate the money is not meant to automate the practice, but to just make the donor feel more confident that their gifts will make a big difference.

"All that research, as Aaron would point out, that isn't perfect," Dayton said. "But if we continue to harness the best we have …. it's a whole lot better than going with your heart and your gut."