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Transforming Systems

Overview

Challenges do not fall to earth in neat, clearly labeled packages that can be easily unpacked. Nor do they exist in a vacuum or in isolation from one another—they are intricately bound and tangled up together.

Consider the issue of food insecurity: not only is the problem created and accelerated by issues of poverty, agriculture, and climate change, it has implications for a range of others, from health to peace and security. It is impossible to effectively address one problem without at least considering, if not outright moving, a range of others.

That is why our model involves addressing not just individual problems, but the entirety of systems that either accelerate or complicate those problems. We call this taking a “systemic” approach, and it’s a vital part of The Rockefeller Foundation’s strategy. This approach is part of our core DNA: Our predecessors at the Foundation worked to cure the ills of society at their root causes. For example, by eradicating hookworm in the southern United States in the early 20th century, not only did the health of individuals improve, their economic and educational outcomes did as well.

At that time, the Foundation’s resources and targeted nature of the problem allowed us to act largely on our own. Today that approach is no longer sufficient: To deal with the host of intersecting problems that affect the world’s population, we must leverage our resources, work in adaptive fashion with a wide range of partners, and look carefully for dynamic tipping points where we can intervene with maximum impact to transform systems and improve the lives of the poor or vulnerable.

Dispensary scene, teaching by lecture and demonstration, Dr. Caldwell
Dispensary scene, teaching by lecture and demonstration, Dr. Caldwell

Here’s how it works in practice:

  • We focus on four systems—and their intersections—in particular: health, ecosystems, livelihoods, and cities. These were all selected because they are central to achieving the Foundation’s two overarching goals of enhancing resilience and creating more inclusive economies, and also because they are dynamic spaces that can be addressed through a systems-based approach. Focusing on these systems enables us to use our resources for maximum impact, by employing targeted interventions in these focus areas that are both transformative and cost-effective.
  • Among the first things we do is strive to understand the beliefs and behaviors that underpin why systems operate the way they do—both to predict barriers to change, and also to identify opportunities. That is why, as part of our initiatives, we intentionally explore the many dimensions of any given system and how they impact the lives of the poor or vulnerable. For example, as part of our response to the Ebola epidemic, we worked with Harvard University to examine weaknesses in the global health system exposed by the epidemic in an effort to improve global responses to future health crises. Similarly, in our efforts to develop more sustainable fisheries, we analyzed the entire system of the fishing industry—including the cultural dimensions of fishing, how it impacts people’s livelihoods and opportunity, and the ecosystem of both large and small fishing operations.
  • Transforming systems also requires that we identify and map out the actors that either impact a system or who have a stake in it. Our YieldWise initiative, for example, looks across the entire value chain of a range of crops to understand how each element impacts the entire system, and how a system-level intervention would transform the lifecycle of food that would otherwise be lost or wasted. To achieve this, we have mapped all of the actors in the system, from smallholder farmers to transportation providers to processors, all the way to mainstream and alternative markets, both local and global, in order to understand how they interact, their interdependencies, and how to influence them. By doing so, we are able to implement an integrated solution that leverages the assets of all actors in the system and addresses the problem in a holistic fashion.
  • Within these systems, we then look for dynamism. Is there momentum building, a coalescing of forces, or other factors that could impact the lives of the poor or vulnerable? What type of intervention in a given area could trigger multiple actions and actors in a more dynamic way? Are there industries growing rapidly, while others are shrinking? If so, how might we leverage these forces? We saw this in our work to electrify rural villages in India, which was based on the observation that cell phone towers were exploding in numbers across the rural landscape. Recognizing this, we asked: What if we could leverage this moment to bring in the telecommunications companies as anchor customers that would drive up demand for electricity, making it economically viable for investors and energy supply companies to bring electricity to rural customers at lower prices? At the same time, could we affect growing awareness of the need for climate change mitigation strategies by building mini-grids that used alternative energy sources—thus shifting the telecom towers from their reliance on diesel fuel? These were tipping points in how the entire system could operate.
  • Once the Foundation identifies a potentially transformative point in a system and understands its moving and connecting parts, we work to maximize this transformative impact by identifying, designing and testing targeted interventions that address the system from multiple directions. For example, the Foundation’s Transforming Health Systems (THS) initiative focused on two key tipping points: first, working to promote Universal Health Coverage (UHC) on an international policy level, where we have worked with the World Health Organization, the United Nations and other organizations to establish a global commitment to universal health coverage as a goal; and second, helping to facilitate UHC on a national level through our Joint Learning Network, which enables member countries to share experiences and knowledge around UHC, and through our support of open-source electronic medical records software and other innovations. Today, our Planetary Health initiative is building on the lessons learned from the THS effort while also bringing new and unique ideas into play. This initiative takes an expanded view of health systems by focusing on the interdependencies of human and natural systems, including a recognition that preserving the integrity of natural systems is an essential precondition for human health.
  • We utilize this same approach to promote the development of systems-changing interventions or innovations from other sources. This includes supporting competitions and challenges that will help uncover and scale novel solutions. For example, in 2010 The Rockefeller Foundation funded the G-20 SME Finance Challenge, an online competition in which the G-20 group of nations and the web-based collective Ashoka’s Changemakers solicited innovative approaches to catalyze financing for small and medium-sized enterprises around the world. The U.S., Canada, South Korea, and the Inter-American Development Bank together committed $528 million to fund the 14 winning proposals—which included such innovative ideas as using low-cost psychometric testing to assess the credit risk of candidates for small loans, and a lending model that uses fixed-price forward contracts as collateral for loans to rural grassroots businesses.

We believe that systems innovation is a skill that can be taught, and a practice that can be spread. We fund five Social Innovation Labs around the world, each dedicated to developing game-changing interventions within various global systems, and sponsoring The Rockefeller Foundation Global Fellowship Program on Social Innovation. This fellowship brings together a diverse group of 18 system entrepreneurs committed to addressing the root causes of problems affecting poor or vulnerable populations by transforming the world’s political, economic, legal, educational, environmental, and social systems.

Learn More About Our Work in Innovation

"We look for spaces where there is opportunity to create change on a systems level, with the potential of improving many lives or changing entire practices that can be sustained after philanthropic funding has ceased."

Judith Rodin, Rockefeller Foundation President

The Evolution of Transforming Systems

  • The concept of systems transformation was embodied in the formulation of The Rockefeller Foundation’s initiative-based strategic model. This model, introduced in 2006 following a comprehensive internal strategic review, described an approach in which individual initiatives were selected based on their potential for significant impact. It also noted that the Foundation’s chosen initiatives would be aimed at breaking bottlenecks, taking advantage of tipping points, and scaling-up proven solutions.
  • The Rockefeller Foundation’s Rebuilding New Orleans initiative, launched in the spring of 2006, was an early illustration of our tipping point strategy. While a large amount of funding had been committed to rebuilding the city following Hurricane Katrina, and while a wide range of ideas had been put forward, the rebuilding effort lacked an integrated planning process. By stepping in and leading this planning process, the Foundation was able to successfully leverage a powerful tipping point in the system around the recovery effort. At the same time, our systems approach enabled us to harness the resources of, and address the needs of, a broad range of actors by implementing a planning process that was deliberate, integrated and diverse.
  • The Rockefeller Foundation’s first large-scale intervention aimed at transforming systems was the Alliance for a Green Revolution in Africa (AGRA). Launched in 2006, this initiative focused on the entire agricultural food production system, an area in which the Foundation had extensive experience. The following year, we expanded the use of our approach by hosting international meetings to examine new systems-based approaches to global health and development financing, respectively. The global health gathering in the New York City area, “Meeting the Challenge of Health Systems,” was notable for its focus on thinking “horizontally” about health systems as opposed to “vertically” about specific diseases. This seminal event paved the way for the Foundation’s Transforming Health Systems initiative, and helped spur the international community as a whole to begin viewing global health from a systems perspective. Similarly, our 2007 gathering in Bellagio, Italy marked the first step to integrate global efforts around impact investing—a paradigm-shifting concept that helped dramatically increase private sector investment in socially beneficial enterprises.
  • In 2011–12, The Rockefeller Foundation’s Critical Issue Project led us to recast our operations in their current context as four interrelated sets of dynamic global systems, each with a related development focus: health systems (Advance Health), environmental ecosystems (Revalue Ecosystems), economic systems (Secure Livelihoods), and urban systems (Transform Cities). While these revised focus areas closely tracked the areas where we were already involved, this shift had the important effect of formally establishing systems change as a core component of our new strategic approach.
  • The Foundation followed up on this strategic shift with a number of steps to align our capabilities with the goal of systems change. These included exploring the specific paradigm shifts we hoped to achieve in the system associated with each area; establishing a more robust scan and search function to identify potentially transformative interventions; enhancing monitoring and evaluation capacity in order to measure how systems are being impacted by specific interventions; and providing Foundation staff with formal training in systems theory.

The Rockefeller Foundation's Strategic Model

In recent years, we have extended our role as a leader in promoting policies and practices related to systems change, both through interventions like 100 Resilient Cities and Smart Power for Rural Development, and through gatherings like the 2014 Urban Resilience Summit. We have also expanded our support for other institutions dedicated to systems change, including academic and nonprofit research organizations, and individual leaders such as the participants in The Rockefeller Foundation Global Fellowship Program on Social Innovation, launched in 2013.

Systems Transformation in Action

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Social Impact Bonds—Launched in 2010

Why This Initiative

As federal, state, and local governments deal with ongoing budget pressures, government-funded social services—particularly preventive services—are increasingly at risk of cutbacks or elimination in the U.S. and elsewhere. This threat to the system of funding social services is directly impacting many vital areas, including healthcare, education, anti-poverty programs, and the criminal justice system. At the same time, there is growing interest in finding ways in which private sector resources can be leveraged to fund such programs.

The Solution

Develop private sector mechanisms for investing in socially productive programs that yield financial dividends when successfully implemented. Through these social impact bonds, which are made possible by a combination of government funds, private investment, and non-profit implementation, investors can realize a return on their investment in exchange for funding social programs and services that improve the lives of disadvantaged, poor or vulnerable people. At the same time, this approach helps relieve the burden on government to run such programs and services, which they are often ineffective at providing.

Intervening For System Transformation

When the nonprofit—and Rockefeller Foundation grantee—Social Finance announced in August 2014 that the four-year reconviction rate for a group of 1,000 ex-prisoners in the U.K. city of Peterborough was 8.4 percent lower than the national average, it was more than a tale of personal achievement. The positive outcome also meant that the investors in the world’s first-ever social impact bond (SIB) were on track to see a positive return on their investment. Since that seminal moment, the continuing emergence and proliferation of social impact bonds has transformed the system of funding social programs—rearranging the relationship between governments and private investors, while at the same time shifting the focus of social programs from inputs to measurable positive outcomes, which is central to impact bonds’ “pay for success” paradigm.

  • SIBs are an innovative financial tool to help governments facing tough budget decisions fund critical social programs. In 2013, states faced $85 billion in federal grant cuts.

The Peterborough Social Impact Bond (PSIB), the first financial mechanism of its kind, was made possible by funding from The Rockefeller Foundation. The PSIB was created in an attempt to reduce recidivism among local prisoners by having private investors provide the capital for a comprehensive support program after they were released. That program, One Service, teams with other local organizations to provide housing, family, health, employment, training support, and drug and alcohol services for its target population. If the recidivism rate for this population remains 7.5 percent below the national norm as of 2016, the U.K.’s Ministry of Justice will repay the investors’ bonds in full.

Besides confirming the effectiveness of Peterborough’s rehabilitation program for ex-offenders—a fact reflected in the U.K.’s subsequent decision to expand One Service to the nation as a whole—the success of the PSIB also showed that “pay for success” investment in critical social service programs is an effective way to provide services to a vulnerable population, and an effective way for investors to realize both financial and social returns.

Following the launch of that first social impact bond, The Rockefeller Foundation has continued to systematically support the growth of social impact bonds. In 2010, the Foundation worked with Social Finance to help introduce SIBs to the U.S. This was followed in 2011 by support to the Nonprofit Finance Fund (NFF) for the same purpose.

The Social Impact Bond Structure

As the use of these bonds has proliferated, the Foundation’s strategy has also shifted from a focus on proving that the SIB concept works to support the development of an ecosystem and infrastructure that ensures SIBs are being deployed properly and effectively. The Rockefeller Foundation funded the establishment of Harvard University’s Social Impact Bond Technical Assistance Lab, which advises state governments on SIB startups, heads an annual Foundation-supported national competition to surface SIB concepts, and has published a comprehensive SIB users’ guide. Other Foundation efforts in this area include funding an informational guide on social impact bonds by the Center for American Progress, and assisting banks to create products around SIBs, including JP Morgan Chase, Bank of America, and Goldman Sachs.

The Foundation has invested directly in SIBs as well, including an investment in the seminal Peterborough SIB. We also provided $1.3 million in backstop funds for the first state-led SIB in the United States, a New York State project to train and employ formerly incarcerated individuals. Bank of America Merrill Lynch raised $13.5 million from private sector and foundation investors to finance this SIB, while Social Finance brought the partners together, structured the investment, and supported the capital raising effort.

This joining of private investors, governments, NGO service providers, and philanthropic facilitators is the essence of SIBs. Today, thanks in large part to The Rockefeller Foundation’s pioneering and ongoing support, SIBs are coming into ever-wider use. Dozens of U.S. states are now either executing SIB projects or pursuing new proposals, as are nations around the globe. Variations on the SIB concept, involving investments in other types of socially beneficial activities, are also taking hold. These variants include development impact bonds to promote investment in developing countries, green bonds to fund efforts combating climate change, and resilience impact bonds to support resilience-building projects—an area in which The Rockefeller Foundation is now also taking the lead.

Learn More About Social Impact Bonds

100 Resilient Cities—Launched in 2013

Why This Initiative

Building on our 60 years of work in urban spaces, from funding the work of urban visionary Jane Jacobs to the development of our Asian Cities Climate Change Resilience Network (ACCCRN)—The Rockefeller Foundation is now implementing our urban resilience-building approach on a global scale. The Foundation is helping cities around the world become more resilient to the physical, social, and economic challenges that are a growing part of the 21st century. Planning for shocks such as fires, floods, and earthquakes, along with recurrent stresses like crime and violence, traffic congestion, and food and water shortages, can help a city better serve its citizens in both good times and bad—particularly it’s poor or vulnerable populations, who are disproportionally impacted by these shocks and stresses. Research has also found that investing in improving resilience ultimately yields seven times that amount in future savings, by reducing the need for post-emergency aid. As the world’s population is increasingly concentrated in urban areas, focusing on enhancing the resilience of urban systems offers a way to maximize the impact of these efforts.

The Solution

The 100 Resilient Cities (100RC) organization, funded by a $164 million commitment from The Rockefeller Foundation, is helping 100 select cities around the world become better able to withstand the physical, social and economic challenges of the 21st century by encouraging them to reconfigure their operating systems around the organizing principle of urban resilience. This resilience approach involves preparing for the impact of natural disasters such as earthquakes, fires, and floods, and also building resilience to the chronic stresses that can weaken the fabric of a city, including high unemployment, endemic violence, or food and water shortages.

Intervening For System Transformation

The cities participating in the 100RC network are selected through a challenge process consisting of three rounds, with the winning proposals for each round chosen from a large number of applicant cities. In total, the 100RC organization received over 1,000 applications. The first group of cities selected to participate was announced in December of 2013, the second group in December 2014, and the final group of 37 cities in May 2016.

Once a city is selected to participate, 100RC works with the member city to embed the principles of resilience into that city’s strategy for dealing with short-term and long-term challenges. Through its systems-based approach, the initiative also enables the city to more effectively integrate non-government actors into its resilience planning, including the private sector, academia, civil society, and community leaders.

This work is focused on four critical tipping points. The first involves providing member cities with expert support in resilience-building, including access to solutions, tools, service providers, and partners from the private, public, and NGO sectors. A second tipping point involves using the initiative’s resources to fund and guide the hiring of a Chief Resilience Officer for each member city. This officer will then spearhead the development of a comprehensive, city-wide resilience strategy, thereby aligning a full set of actors, including government, with the goals of enhanced resilience. In addition, member cities become part of a network that provides shared learning and support around resilience building. This network is considered a third tipping point. Finally, the development of a resilience platform that catalyzes market activity around resilience services and products is the fourth tipping point.

While the 100RC initiative is focused specifically on transforming local and regional infrastructure and governing systems, it also has the secondary aim of transforming global urban systems in general by creating a new urban resilience paradigm and by nurturing the development of global resources and relationships that will help support that paradigm. Besides working closely with the local governments of participating cities, 100RC has also developed a robust set of Platform Partners, a wide array of leading and innovative institutions from the private, public, NGO, and academic sectors. These partners are a vital component of 100RC’s efforts, providing the tools and services needed to build resilience, influencing the marketplace as additional resilience tools are developed, and vastly extending the impact of the Foundation’s own funding in the process.

The 100 Resilient Cities Model

As participating cities identify unmet resilience-building needs, 100RC matches those needs with the capabilities of specific Platform Partners. The list of these partners is extensive and continually expanding. It currently includes global companies such as Microsoft, Swiss Re, and Veolia; government agencies like the U.S. Environmental Protection Agency, the U.S. Department of Health and Human Services, and Sandia National Labs; international organizations such as Save the Children, the International Rescue Committee, and the Nature Conservancy; and academic institutions including MIT Climate CoLab and Virginia Tech’s Advanced Research Institute. The majority of the 100 selected cities have appointed Chief Resilience Officers and have resilience planning efforts underway. A number of cities, from New Orleans to Mexico City to Melbourne, have released their resilience strategies and are now moving to implementation.

The majority of the 100 selected cities have appointed Chief Resilience Officers and have resilience planning efforts underway. A number of cities, from New Orleans to Mexico City to Melbourne, have released their resilience strategies and are now moving to implementation.

Learn More About 100 Resilient Cities

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