Coalition Building

Essence

“If you want to go fast, go alone. If you want to go far, go together.” — African Proverb

Systemic investing is collaborative investing. This is in part because societal issues are shared issues and hardly ever overcome by a single individual or organization alone. It’s also because of systemic investing’s strategic imperative to work with a great many tools in the toolbox of finance, ranging from market-rate and concessional capital to philanthropy, insurance, tax incentives, subsidies, advanced market commitments, insurance, and supply chain finance—and those tools tend to be in the hands of different types of capital deployers.

So the importance of forming change coalitions—with a shared vision, a set of guiding principles, and trustful relationships—cannot be overstated.

There are at least five good reasons to work in coalition with others:

To harness the necessary insights and knowledge about a system/challenge constellation;
To have the necessary kinds of capital needed to address important levers of change;
To endow the systemic investment program with credibility and legitimacy;
To obtain the resources to fund orchestration work; and
To have sufficient leadership to get going and hold the center of the work over time.

Perhaps the most important of these reasons is the one about leadership. What we have observed in our work is that the most successful systemic investment attempts have all been driven by people with extraordinary determination and commitment to the cause: Kaj Löfgren at Regen Melbourne, Lukas Walton at Builders Vision, Tonya Allen at McKnight Foundation (in service of the GroundBreak Coalition), Ruth Shaber at Tara Health Foundation, and Jesse Fink at the Betsy and Jesse Fink Family Foundation and Mission Point Partners (in service of ReFED). This is just a small sample of individuals who have pushed against financial orthodoxy to reimagine the flow of financial capital for societal impact. So if you are about to start a systemic investment program, your own leadership—and the leadership of your coalition partners—will be critical.

That said, individual leadership is often required to get started, but what will sustain a program over time is collective leadership—which is why it’s important to work in coalition. Making sure leadership capacity is distributed across many shoulders is also a risk hedging strategy. Because if there was a single individual leading the charge, what would happen to the program if that individual were to move on?

Finally, coalition building isn’t a linear process, nor something that you’ll ever be done with. As your systemic investment program emerges and evolves, so will your change coalition—with some partners leaving and others joining over time. So what you’ll need is a set of rules and protocols that guides that process over time and makes sure the coalition stays fit for purpose over the duration of your program.

Example

Initiated after George Floyd’s murder in May 2020 and spearheaded by the leaders of two local financial stakeholders (McKnight Foundation and U.S. Bank), the GroundBreak Coalition is a systemic investment initiative aiming to close racial wealth disparities for BIPOC people in Minneapolis-St. Paul (USA) by facilitating financing for homeownership, entrepreneurship, and commercial real estate developments.

From the outset, the GroundBreak Coalition has worked to ensure that “the system is in the room”—that the full range of stakeholders affected by or involved in bringing about the Coalition’s transformational intent are brought into the conversation, and that their voices are heard. That’s because the GroundBreak Coalition is predicated on the acknowledgement that the systemic challenge it addresses is beyond the scope and power of any one organization or sector to overcome alone.

In practice, getting the system in the room has meant a sustained, strategic, and patient program of inclusive engagement with a broad array of stakeholders. Over the initial six-month design process of the Coalition, GroundBreak brought together over 170 individuals and 120 organizations from the civic, private, public, and philanthropic sectors. In so doing, the Coalition’s project team played a crucial role in facilitating the work, ensuring the focus remained on the transformational intent, recording what was learned through the sessions, and maintaining momentum.

What has emerged from this process and from GroundBreak’s commitment to broad-based, community-led collaboration are governance frameworks and decision-making processes designed to encourage cooperation and coherence across more than 100 organizations.

Guidance

1) Mapping the ecosystem

The first step to pulling a change coalition together is to do some initial stakeholder mapping. Getting a feeling for the landscape of actors in the system—capital deployers, beneficiaries, key stakeholders, influencers, etc.—will be necessary to make smart choices about who to pull into your coalition and how. It will also be necessary to establish your own legitimacy for the work—new entrants into an ecosystem are often looked upon with suspicion, so you need to do your homework and become aware of who’s gone before you.

There is a plethora of online resources for how to visually map stakeholder ecosystems—just google “stakeholder mapping” and browse through the results. The simplest way to start is almost always to just compile a list of organizations and individuals, with some basic information about what they’re working on. With that list in hand, there are no limits to how much information, nuance, and sophistication your stakeholder mapping can acquire. You can map these stakeholders based on a myriad of factors, including:

Scale at which they operate,
Relationships they hold with each other,
Power and influence they exert in a system,
Degree to which they are likely going to be supportive of your effort, and
Amount and quality of insights they might hold about the system.

A health warning: stakeholder mapping can be a rabbit hole. So the trick is to understand what information is actually useful as you build your systemic investment program. Here’s what we’ve learned so far:

Which capital deployers are already active? Chances are you won’t be the first, and nobody has necessarily waited for you. So knowing who the most active investors, foundations, corporates, and other financial stakeholders in your system of interest are is your first piece of homework.
Who holds power and influence, and who is excluded and overlooked? Capital holders are disproportionately powerful actors in society, and those most impacted by capital allocation decisions are often not involved in the process. This is not just an ethical problem (weak democratic legitimacy of investment work) but also a political one, especially when there’s community-led backlash against a systemic investor’s intent. So ask yourself: Who holds and exerts power? Who will be most impacted? How can you mitigate power imbalances, e.g. by bringing traditionally uninvolved stakeholders into the work so that their voices are heard and they have a say over investment decisions and a share in the rewards?
Who are the niche innovators? Transformative change often comes from actors at the edges of the system rather than the mainstream. These actors are also called “niche players” (by the Multi-Level Perspective framework) and referred to as the “pockets of the future in the present” (by the Three Horizons framework). A distinguishing feature of such niche players is that they may not be readily identifiable at first sight, so you may have to do some research to uncover them. But once you’ve identified them, you’ll get a window into possible futures, which will help you understand which stakeholders might become increasingly important over time.
Who stands to gain from your work, and who stands to lose? Change always benefits some and disadvantages others. For instance, in a city’s transition to electric mobility, power utilities and operators of charging infrastructure will win, while those operating gas stations and car maintenance shops will lose. Knowing your beneficiaries will help you identify supporters and allies for the work. Understanding who will stand to lose from the work will allow you to anticipate and counteract pushback while baking into your systemic investment program measures that mitigate any social harm caused by your work.
Who could your fellow leaders be? Systemic investing can be a grind, and you’ll need determined and committed partners on your side to help you pull and push and persevere. Who’s ready to join your team? Who shares your vision and is on board with your approach? One particular leadership role is that of a “challenge owner”, typically an organization that is a key stakeholder in the system, stands to gain from the change you’re envisioning, and could act as a champion (and possibly orchestrator) of the work. Candidates for challenge owners have in-depth system expertise, convening power amongst relevant system stakeholders, credibility and legitimacy to act on behalf of those who will be impacted, and resources to support the systemic investment program. Sometimes, it might be your own organization that’s best positioned to play this role, and sometimes somebody else is better placed to take on that mantle.
What is your own position, power, and influence in the system? At some point in your stakeholder mapping, you will have to put yourself onto the map. Where do you fit in? What’s the role you’re uniquely positioned to play? Which suspicions and prejudices will you possibly have to overcome? This is about seeing yourself as a node within a wider social network to understand how you need to show up in the coalition.

With those questions illuminated, it’s time to get practical.

2) Building the coalition

What follows is a simplified 5-step process you could go through

Making choices

Once you understand who you could work with, you’ll have to decide who you will work with—at least in the beginning. There’s no hard and fast rule to follow to get you to such a short-list, but here are a some pointers:

If there are a handful of influential players in the system (e.g., a foundation, family office, corporation, or government), make sure that you have at least some of them on board and that you are at least connected to all of them. At a minimum, make sure they know you and don’t perceive you as a threat.
If your work seeks to benefit a particular group (e.g., farmers in the case of a systemic investment program on regenerative agriculture), make sure that group is as much involved as possible—at least consulted in a meaningful way, but ideally integrated into your governance and decision-making frameworks.
Make sure you’ve got the 2-3 most important capital types and asset classes for your context (venture capital, infrastructure finance, insurance, philanthropy etc.) present from the start. If running your systemic investment program requires grant funding, get some foundations on board. If a government body holds a particularly powerful financial tool (e.g., a subsidy program), find a way to engage with it in a systematic way.
Consider adding partners that will strengthen your credibility and legitimacy, especially if you’re not “part” of the system yourself (e.g., resident of a city you seek to benefit).
Consider adding partners that bring expertise that you may be lacking, e.g. around facilitation and negotiation, or who speak the local language.

Reaching out

Coalition building is a sales process—you’ll need to convince your future partners that it’s worth spending time (and possibly money) with you. So create a “brochure”—a one-pager or slide deck—that talks about your vision, strategy, and execution plan, and articulates why the partner you’re trying to win should join the effort. Winning the first is the hardest, but with each subsequent commitment, you will start building gravitational attraction that will make it easier to get others on board.

Designing governance

People will join your coalition for your vision, but they’ll leave it because of poor governance. So make sure you build consensus with your partners around the way the coalition is supposed to work. How big can/should it be? How will joining and exiting the coalition happen? How will decision-making work? What happens if there’s a conflict? The usual stuff.

Co-creating

Finding answers to these questions is best done in a series of working sessions where the roles, responsibilities, and guiding principles for the work are co-developed and agreed. Here are some guiding questions for these sessions:

What do we know about the broader context in which we’re doing this work?
What do we need to learn/find out?
How do we need to think, act, and work differently for this work to succeed?
Who do we need to connect with beyond the people already present?
What might be easy? And what might challenge us?
What aspects of this work are we most excited about?
What are the concrete next steps we can take right away to implement the insights from today into our way of working?

The key insights and agreements from coalition-building work can be enshrined within formal documents, such as a terms of reference (ToR), a memorandum of understanding (MoU), and/or a charter—to name just a few common formats. Just make sure you’re not enslaving your coalition to its own governance documents.

Getting started

After all this rigorous research and thorough relationship building work, the time will come to get started. In fact, you will want to start sooner rather than later. When it comes to coalition building, nothing kills excitement and energy as effectively as endless talk—and nothing galvanizes people more forcefully than concrete action. So try to get into “the doing” early on and then use the momentum this creates to expand your coalition.

Tips

Collaboration is bloody hard. It would be much easier for you to build an investment fund and work in traditional ways, limiting collaboration to co-investing with other fund managers from time to time. So when you find yourself bogged down in tedious coalition building work, remember this: Coalition building is the work.
State that you’re not looking to own or control. Coalitions thrive on a sense of co-ownership and shared decision-making. As the leader of a coalition-building exercise, miss no opportunity to mention that you’re not looking to own or control anything, and seize every opportunity to walk the talk. Your endeavor will move at the speed of trust, and there’s no better way to build trust than being generous and sharing what you have and know with others.
If you can, get long-term resources in the door at the start. It’s possible that many organizations you’ll want to work with are dependent on the same resources as you (e.g., grants, investment capital). If you show up to the work without your own resources in place, those possible partners might see you as competition. If, however, you can already show that you’ve secured those resources (ideally for the long term), this won’t be a concern.
Quality is more important than quantity. You won’t necessarily need 100+ organizations in your coalition—perhaps 3-5 is the sweet spot for the context in which you operate. The quality of your coalition matters more than its size.