In February, Caterpillar Foundation President Michele L. Sullivan stood atop a hill in Rwanda, nearly 8,000 miles from the comfort of her serene office in Peoria, Illinois. She had come to Rwanda’s Rulindo district to inspect a water-supply-boosting pipeline system that ran 2,000 feet up the hill to send residents clean water. She listened to stories of women whose children were now finally able to go to school instead of collecting water. And when Sullivan heard water gurgling through the pipeline, she was all smiles, knowing the foundation’s money had been put to good use.
The pipeline project—which was funded by the Caterpillar Foundation, the Rwandan government, and others, and led by charity: water, one of Caterpillar’s partner organizations—is a perfect example of a growing movement within the philanthropic world toward impact investing and strategic partnerships. Over the past decade, donors have become increasingly hesitant to just open their pocketbooks and hope that other groups put that money to efficient use. Instead, they view their donations as investments in the greater good—they want to see results, i.e., returns on those investments—and the Caterpillar Foundation has been a leader and pioneer in this approach.
Founded in 1952 as the charitable arm of the global maker of construction and mining equipment Caterpillar Inc., the Caterpillar Foundation has always been interested in giving back to society. While the company focuses on building strong economies through traditional infrastructure—roads, bridges, and access to energy, for example—the Caterpillar Foundation helps build strong communities by bolstering human infrastructure, like basic human needs and access to education.
In 2012, that organizational mission became even more ambitious, borrowing from the business-oriented leadership that guides Caterpillar Inc. The foundation would no longer simply write checks; it would become a global advocate for economic development, empowerment of women and girls, and the eradication of poverty, with a focus on aiding causes related to basic human needs (i.e., food, shelter, water, energy, and, disaster relief), education, and the environment. Undergirding that revamped giving strategy is a multipronged (and proprietary) approach known as Together.Stronger.™, which emphasizes monetary accountability, aims to build alliances across public, private, and nonprofit sectors, and has given itself the lofty goal of improving the lives of 50 million people by 2020. Says Sullivan, “Philanthropy used to be, ‘Here’s our check, we know you’ll do good, and away you go.’ But in today’s world, we’re not only going to give you a check, we want to know what you’re doing with it, and how many people will be impacted.”
From a practical perspective, here’s how Together.Stronger works: Rather than awarding a grant to a nonprofit with few or no strings attached, the Caterpillar Foundation mainly invests in programs with clearly defined performance outcomes. And to assess a program’s success, once a grant has been made, foundational staffers require those grant recipients to submit impact reports showing concrete results. The team spends significant time reviewing the reports, looking for hard numbers that show the foundation’s support has affected poverty through measurements like reduced homelessness, an increase in the number of people who have clean, running water, or rising literacy.
Among hundreds of nonprofit partners, its current roster of grantees include the food-distribution charity Feeding America, the United Nations Foundation, the Nature Conservancy, American Red Cross, and Water.org. Part of the criteria for selecting any partner charity is that group’s ability to build additional alliances with nonprofits, private ventures, and government organizations, and therefore amplify the impact of every donated dollar, as was the case in the charity: water project in Rwanda, which brought different groups together to solve the same problem. Sullivan calls this the “three-legged stool.” “That’s when you have public, private, and nonprofit sectors working together,” she says. “This kind of collaboration creates an exponential impact.”