By Nicole Wallace
Posted by permission of The Chronicle of Philanthropy.
The online auction site eBay has long used feedback from its buyers and sellers to develop trust between them—which has helped build the company into a multibillion-dollar business. These days, eBay’s founder, Pierre Omidyar, and his wife, Pam, have taken the same customer-feedback approach to their philanthropy.
The Omidyar Network owes its unusual structure—awarding grants to nonprofit organizations and making investments in for-profit businesses that create social benefit—to the Omidyars’ belief in the power of business as a tool for social change.
Similarly, network officials say that Mr. Omidyar’s experience building eBay from start-up to Internet giant has fostered the network’s belief that social-change organizations need more than money to make a difference.
Over the past three years, the network has increasingly focused on helping the organizations it supports improve their operations.
“When we decide to get behind an organization, our objective is to do what is necessary to help them succeed,” says Matt Bannick, the former president of eBay International who is now managing partner of the Omidyar Network.
Learning From Feedback
The change in approach has helped right what had been a rocky start in philanthropy for the Omidyars. The Omidyar Family Foundation, predecessor to the current network, was widely seen as difficult to work with by grantees at the time.
The Omidyar Network is a very different organization, says Dena Trujillo, who serves as the network’s senior manager of human capital and also worked for the family foundation.
“Something that makes Omidyar’s work different is that we come from Pierre, from a technologist who iterates and grows and learns from customer feedback and then changes the model,” she says.
“The reality is we got that feedback at points from the market that maybe at times we were being too heavy-handed. We have evolved.”
Current grantees praise the network’s stepped-up assistance and say the grant maker is deeply involved without trying to dictate how they run their organizations.
When Landesa, a Seattle charity that works to secure land rights for poor people in developing countries, started work on a new business plan, Mr. Bannick, who is a member of Landesa’s board of directors, asked if the organization had thought about hiring a major consulting company to help the group through the process.
“We said, ‘Yeah, until we priced it. It’s just completely outside of our price range,’” recalls Tim Hanstad, chief executive of Landesa, which until recently was called the Rural Development Institute.
The Omidyar Network made an additional grant to the organization to pay for a six-person team from the Bridgespan Group to work with Landesa for six months as it crafted a business plan. Since then, Omidyar has helped Landesa with executive coaching, a compensation study, and recruiting.
Mr. Hanstad says that a lot of foundations talk about being partners with the charities they support but that he’s never had this close a relationship with a grant maker. “We’re in this together,” he says. “We either succeed together or we fail together.”
Indeed, that is a key message Mr. Bannick and other Omidyar officials seek to impart to the officials of organizations supported by the network who gathered here for a meeting this spring. He is one of several speakers who refer to the network’s five core values—respect, impact, collaboration, humility, and service.
“We also want to continue to reinforce our own humility in recognizing that it’s actually your work that’s central to the success of the Omidyar Network,” he tells participants. “Our role really is to support you, to be in service to you and ultimately those who you are serving.”
In a playful illustration of those values in action, network employees enter the plenary session that ends a long day of sessions bearing trays of cupcakes. A small flag is planted in each of the confections. One side bears the signature of an Omidyar Network employee, and the other side reads, “Thank you.”