Framed by a constellation of stars on the walls of the Capri Theater in Minneapolis, Andrew Dayton took the stage on May Day for the public launch of the private foundation he’s created. “We live in one of the most philanthropic regions in the country,” said the 35-year-old son of former Gov. Mark Dayton and Alida Rockefeller Messinger, speaking to an affluent audience of movers and shakers from the business, civic, and nonprofit communities. Yet, Dayton stressed, one in five residents of the Twin Cities lives in poverty.

Dayton has spent his life in the public eye, without feeling he earned that attention. His father was involved in politics throughout most of his childhood. Any mention of his last name sends Minnesotans down memory lane, sharing a story about their favorite department store of yesteryear. On his mother’s side is one of America’s most storied families, synonymous with wealth and philanthropy. When he and his older brother, Eric, opened the Minneapolis restaurant Bachelor Farmer and Marvel Bar, and then the neighboring retail store Askov Finlayson, the media attention came quickly, as did the references to “Dayton’s 2.0.”

But Andrew Dayton stepped away from it all five years ago and moved to San Francisco—first for his business, and then to embrace the anonymity and find his true passion: poverty alleviation. He came home to Minnesota to create a new breed of evidence-based philanthropy that he calls the Constellation Fund. Clad in a perfectly tailored navy suit and crisp white dress shirt while forgoing a tie, the young Dayton told his much older audience at the Capri that Minnesotans are living in a “broken philanthropy marketplace.”

The grandson of a Dayton and a Rockefeller who were prominent arts patrons, Andrew Dayton was raised to give back to his community. But he’s taking a risk by building a foundation from the ground up that will employ a new approach to battling poverty, an economic and social problem against which government and philanthropic leaders have struggled for decades to gain traction.

On this early spring night, Dayton thanks his foundation’s financial backers for supporting nonprofits that aim to help low-income people climb out of poverty. He remarks on the incongruity of 80 percent of U.S. philanthropic dollars going to universities, the arts, building projects, and other mainstream institutions, while there is such a gigantic need to help the poor.

The big picture

The Constellation Fund isn’t focused on helping low-income people with their immediate needs, but rather addressing housing, education, and other larger issues that will move people into the middle class. He tells his supporters that instead of measuring “outputs,” such as the number of people getting temporary assistance, he wants his new foundation to emphasize “outcomes,” in which lives are transformed.

He says later that he recognizes there will be “some natural skepticism from nonprofits.” Many will be watching who gets grants from his foundation and whether his use of analytics is successful in making a greater impact than more traditional philanthropy has made.
 

I feel happy and grateful that my children value philanthropy and don’t think of inherited money as their money.

—Alida Rockefeller Messinger, Andrew Dayton’s mother 

Melvin Carter, the first black mayor of St. Paul, is an ally in Dayton’s nascent effort. “This work has to be a team sport,” Carter says, emphasizing the importance of leveraging resources to alleviate poverty. During his turn on the Capri stage, Carter noted Prince’s connection to the landmark venue in north Minneapolis: Forty years ago, Prince performed at the Capri on Broadway Avenue for his first solo show.

Prince was a rising star in 1979 and his talent took him to the top of the entertainment industry.

The music, fashion, and sports scenes have undergone big changes since Prince became a national phenomenon. But if one contrasts economic life in the Twin Cities in 1979 to 2019, it’s clear there has not been a dramatic improvement in racial disparities. Children raised in low-income households still struggle to do better than their parents.

Dayton’s vision for the Constellation Fund started to take shape in late 2017. By the end of June this year, he’d raised $1.65 million for making grants. He’s recruited a high-powered board that’s embraced his argument that a foundation can be more effective through strategic grantmaking. Specifically, he advocates providing large, unrestricted grants to nonprofit organizations that are “best in class” in fighting poverty.

San Francisco immersion

Dayton did not wake up one day and decide to create a foundation to address persistent poverty. But he’s had more exposure to giving and philanthropy than most people in their 30s. Throughout his adult life, he has regularly been asked to make charitable donations.

“When you have the names Rockefeller and Dayton, you end up on a lot of fundraising lists,” Dayton says.

Dayton says he often felt overwhelmed about how to evaluate the avalanche of charitable funding requests. He gave money to organizations he believed in, such as Habitat for Humanity. He also met with nonprofit executive directors, who asked him for money to support a host of programs. But, he concedes, “I just didn’t feel like I was being a really thoughtful steward of my resources.”

His conception of “smart philanthropy” evolved after he left his hometown of Minneapolis for San Francisco in 2014. He moved to California to oversee Askov Finlayson’s pants manufacturing. Dayton, who earned an undergraduate degree in history from Yale and a law degree from the University of Michigan, says he enjoys being in business with his brother. But, he acknowledges, “I wasn’t tapping into part of my passion”—public policy.

As his company’s manufacturing operations got underway, he accepted a part-time position in the San Francisco city administrator’s office. Businesses received tax breaks to remain in San Francisco, and it was Dayton’s job to administer a community benefit program. He was charged with making sure business-provided benefits—in exchange for the tax breaks—were put to good use.

His work got noticed. He was offered a full-time job as the deputy director of legislative and government affairs for then-Mayor Ed Lee. In turn, he decided he needed to exit the day-to-day business operations of the company he still co-owns with his brother to concentrate on his job in San Francisco. While he dealt with lawmakers and staff in Sacramento and Washington, D.C., he also crossed paths with people outside of government who were tackling social and economic problems in the city. “Homelessness and housing affordability are at the top of the list of priorities in San Francisco,” says Dayton, who was particularly impressed with the nonprofit Tipping Point’s work to reduce the chronic homeless population by 50 percent.

He got to know Tipping Point founder Daniel Lurie, who worked for the Robin Hood Foundation in New York City. Founded in 1988, Robin Hood says it provides “200 of the best nonprofits with financial, real estate, and management support.” It spent $116.1 million on poverty-fighting efforts in 2017, according to its annual report.

As he was learning more about the work of Robin Hood and Tipping Point, he was still connected to family, friends, and community issues back home in Minneapolis. “I was reading these articles in the Star Tribune, when I was in the mayor’s office, about rising inequities and a lack of affordable housing and homelessness spikes,” Dayton recalls. In San Francisco, he was coming face-to-face with homeless people and saw residents with jobs who couldn’t find housing they could afford. He didn’t want Minneapolis to become San Francisco. But he worried that might happen in Minneapolis if public and private leaders failed to make the hard policy decisions and wage interventions to better address housing and poverty issues.

It was time for Dayton to go home.

Building a new foundation

He moved back to Minneapolis in 2017, driven to launch a foundation in the Twin Cities patterned after Robin Hood and Tipping Point.

Even though he was operating as a one-man band when he started to build the foundation, he didn’t consider it a lonely pursuit. “There was definitely some uncertainty at the outset,” he says. “I had seen the power of this model in San Francisco and knew that it was needed in the Twin Cities, but also wasn’t sure what the reception would be.”

The Robin Hood Foundation was constructed with four pillars: rigorous metrics, accountability, partnership, and 100 percent charity. The organization places an emphasis on metrics “to determine how much each dollar lifts the well-being of struggling New Yorkers,” according to its website.

That value on precise impact resonated with Dayton. His late grandfather Bruce Dayton, a longtime arts patron, was results-oriented and would often say: “You get what you inspect, not what you expect.”

Andrew says that he and Eric have used the inspect vs. expect credo in their businesses, but it also applies to an intelligent approach to philanthropy. “If you just expect to get great results but then don’t really dive into those details, chances are you are not going to get what you expect out of it,” he says.

His approach contrasts with some foundations that do high-volume grantmaking. “The goal here isn’t to be spray and pray—give lots of little grants to a thousand organizations—but taking time to identify who are the organizations that need and deserve support and then funding them at a really deep level,” he says.

“When it comes to poverty alleviation, we’re living in a data tsunami but an analytics desert,” Dayton says. Just as the Oakland A’s baseball operation gained a competitive edge through analytics, popularized in the movie and book Moneyball, Dayton wants to use analytics to break through with new insights in philanthropy.

To help identify the “best in class” nonprofits, Dayton sought the expertise of economists and program evaluators. He initially asked for help from Richard Chase of the Wilder Foundation, who had been doing data analyses for nonprofits. He contacted Aaron Sojourner, a University of Minnesota professor who had recently served as a senior economist with the President’s Council of Economic Advisers. He recruited two other experts, Judy Temple of the University of Minnesota and Mark Wright of the Federal Reserve Bank of Minneapolis, to join him in his foundation quest. All four were intrigued by Dayton’s vision and volunteered to help.

“All of a sudden, I had this group of really amazing thinkers and researchers and economists who were interested in helping me bring this to life,” Dayton says. The quartet constitutes what Dayton calls the Constellation Impact Council. They started meeting in January 2018 to create an extensive metrics framework that will allow Constellation staff to take a grant request and make an “evidence-based assessment of how much it is going to raise the well-being of families.” The metrics allow them to weight similar and dissimilar programs.

Sojourner, who chairs the Impact Council, uses employment programs to explain how it works. One nonprofit may provide computers and other assistance to help people search for jobs. A second nonprofit may directly run employment training programs so unemployed people can acquire marketable skills. The latter would be more expensive but likely would have better outcomes when measuring the number of people who secured jobs and raised their standard of living, he says.

The Impact Council met in April at the Humphrey School of Public Affairs with Dayton and Jose Diaz, a Ph.D. in applied economics who serves as Constellation’s chief impact officer. Their discussions sound wonky to non-economists, including their observations about “counterfactuals.”

Dayton is making efforts to translate some of the technical analysis into terms that grant applicants can understand. During a site visit at People Serving People in July, Dayton distributed a “quantitative analysis overview” to leaders of the downtown Minneapolis nonprofit. The foundation wants to know how nonprofit programs will affect individuals’ lifetime improvements to health and income.

Outside of that meeting, Dayton stresses that “while we take the metrics seriously, we don’t blindly follow them.” A full Constellation Fund evaluation takes about six months. “We spend a lot of time getting to know the leadership and the organization, and we balance qualitative observations co-equally alongside our quantitative findings as part of the decision-making process.”

Like the Robin Hood Foundation, board members of Constellation are personally funding operational costs so that 100 percent of the money raised from donors can go directly to nonprofits. Andrew’s brother, Eric, became his first board member, and then Stephen Hemsley, executive chairman of UnitedHealth Group, made a commitment. Currently, a nine-member board and two leadership funders are paying for administrative expenses. Just about everyone Dayton invited to join the board said yes, but not without due diligence.

“These are smart, sophisticated people who ask pointed questions, do their homework, and make careful decisions,” says Dayton, who pledged $1 million of his own money. More than half of Dayton’s contribution has been invested in building the infrastructure, metrics, team, and grantmaking capacity of the organization, he says.

Marcia Page, co-founder and executive chair of the Varde investment firm, didn’t know Dayton before meeting with him about serving as a board member. Her family has a small foundation, and she was concerned about reducing poverty. “I have been thinking about the education and housing pieces [of the problem], and it is daunting and systemic,” she says. Before learning about Constellation, she says, “I found myself looping between organizations but not able to anchor my thinking.”

She agreed to be a board member because she likes the rigor of the evidence-based analysis of nonprofits. Further, she emphasized that Constellation’s model recognizes that alleviating poverty is a complex undertaking, because many low-income people are struggling with several financial challenges that intersect in their lives. The foundation will be funding grants to address education, housing, health, and employment needs.

Dayton’s philanthropic lineage

Andrew Dayton never met his famous grandfather, John D. Rockefeller III, who died in a car accident in New York in 1978 before Andrew was born. But the work that Dayton is doing now stems from the philanthropic values he shares with his mother, who was taught the responsibility of giving by her father, the chairman of the Rockefeller Foundation.

When Andrew and Eric were young, Alida Messinger says she would give them small allowances and tell them they needed to put half the money for themselves in a cash box and half in a philanthropy box.

“Once a year, as I had done with my father, we decided at Christmastime what to do with the money that had accumulated,” she says. When Andrew was 10 or 11, she recalls, “we went to Target and bought a cart full of toys and took it to a children’s shelter. He carried the bags in himself. The person at the desk was very surprised that a little boy wanted to give away some basketballs and games.”

Now she’s watching Andrew develop his giving ethic into a new foundation that has the potential to have a major impact on the lives of low-income people. “I feel happy and grateful that my children value philanthropy and don’t think of inherited money as their money,” Messinger says. “It was entrusted to us to try and make the world a better place and to do good things, not to be spent on frivolous things or only on ourselves.”

What Constellation is going to be doing will help everybody up their game on the analytical part of philanthropy.

—R.T. Rybak, Minneapolis Foundation CEO

When she served on the board of the Rockefeller Family Fund, she says, members placed a premium on funding new models “that deal with the root causes of social problems rather than the symptoms.” She sees Andrew taking a problem-solving approach to address the root causes, but with the added benefit of sophisticated data analysis.

“I hope so much that he is successful in his endeavor,” Messinger says. “It takes a lot of courage to do something like this and do it all on your own—to put yourself forward and take the risk.

Mark Dayton, Andrew’s father, says he’s seen how a combination of forces “are keeping people down,” which is one key reason that major progress on poverty reduction has been elusive. So he’s encouraged to see his son pursuing an innovative path, one that takes into account multiple economic barriers.

“When he was young, he had real sensitivity to other people in need,” Mark Dayton says. Between Andrew’s sophomore and junior years at Breck School, Mark Dayton was running for the U.S. Senate and his son was volunteering for a health care helpline. “Andrew got a call from an elderly lady who was isolated in a nursing home and distraught,” Mark Dayton says. “He gave me her phone number and was adamant I call her right away, get involved and do what I could. It’s an example of how other people’s plights really mattered to him.”

Asked whether he’s given Andrew advice on Constellation fundraising, Dayton laughs. “I’m a poor example for anybody who wants to raise money for a purpose,” he says. “He knows that I’ve never enjoyed fundraising. It’s a sign of his real commitment that he is making a lot of contacts and pitching the Constellation Fund.”

Partnership with nonprofits

Dayton estimates the Constellation Fund will award $1.65 million in grants by June 2020. Under a pilot program in the first half of this year, Constellation made its first four grants totaling nearly $300,000. St. Paul-based Neighborhood House was one of the grantees, receiving a $70,000 award.

Founded in 1897 by women from Mount Zion Temple, Neighborhood House is known for programming that helps immigrants and refugees. Today, president Nancy Brady says the staff and volunteers are happy to aid “everyone who is trying to improve their social and economic well-being.” Neighborhood House provides food support to about 10,000 people a year and offers many other programs such as parent and early childhood education.

The goal here isn’t to be spray and pray—give lots of little grants to a thousand organizations—but taking time to identify who are the organizations that need and deserve support and then funding them at a really deep level.

—Andrew Dayton

Dayton says Neighborhood House was funded because it’s doing a good job of delivering various services that families need to make quality-of-life improvements. In particular, he says, the analysis showed key benefits from the nonprofit’s educational programs, including early education, parenting, and low-literacy programs.

Brady has found her interactions with Constellation staff to be refreshing. “There are a lot of foundations that talk about partnerships,” Brady says. “There is something about their approach that really feels like a partnership.” Constellation, which has seven full-time staff, helped Neighborhood House access McKinsey & Co. pro bono services to examine the organization’s service design.

In the world of philanthropy, public discourse over intervention strategies and funding priorities is mostly civil. But as the Constellation Fund moves beyond the pilot grantmaking phase, it will face more scrutiny.

Trista Harris, former president of the Minnesota Council on Foundations, is among those watching as Constellation enters the Minnesota philanthropic sector. “Poverty is a wicked problem,” Harris says. “Foundations have invested a lot of dollars, and a lot of the problems are getting worse.”

Harris, who leads national consulting practice FutureGood, cautions, however, that “not everything that matters can be measured.” The bedrock of strong nonprofits, she says, is securing general operating support and long-term funding commitments. Dayton intends to provide the unrestricted funding that nonprofits want and he plans to work with effective nonprofits over a period of years. But Constellation also will spend some time each year raising the money it will give away to grantees.

In communities of color, Harris says, “there is a lot of talk about participatory grantmaking.” She recommends that Constellation staff spend some of their time connecting directly with people living in poverty to inform their grantmaking decisions.

Chanda Smith Baker served as CEO of Pillsbury United Communities before taking a leadership role with the Minneapolis Foundation in 2017. “I hope as Andrew leads this new work that he is willing to share his learning broadly with us,” she says.

As an African American woman, she emphasizes that “not all communities organize and operate the same way.” It’s important to “stay in a listening stance,” so program staff get a clearer picture of differences among racial and ethnic groups. “Some approaches may look different than others to get to the same result,” she says.

Former Minneapolis Mayor R.T. Rybak supports Andrew Dayton’s work. Dayton sits on the board of the Minneapolis Foundation, where Rybak has been president and CEO since 2016. “What Constellation is going to be doing will help everybody up their game on the analytical part of philanthropy,” Rybak says.

By offering a new set of ways to measure impact, Rybak says, Constellation becomes “an important part of the ecosystem.” Still, he favors philanthropy in a variety of forms.

“We take a number of approaches that are deeply grounded in data and analytics, and in other cases have issues emerge from the community whose support may come instead from trusted voices out there doing emerging work on the ground,” Rybak says.

Dayton has talked to countless people about poverty alleviation, and he’s enlisted many leaders to financially support the Constellation Fund. But as he seeks to better the lives of low-income people, the life lessons he learned from his parents and grandparents are paramount in his mind. His family, he says, expects him to go beyond “giving back in terms of giving out dollars.” He also was taught to be a “contributing member of society in some way.”

Since returning to Minnesota, Dayton hasn’t looked back. “This is where I felt like I had the biggest opportunity to contribute something,” Dayton says. “It just felt like I had to come back and take this on.”

Liz Fedor is the Trending editor of TCB and has worked as a program officer for two Minnesota-based foundations.