Liam Krehbiel opted out of the booming family business to start a nonprofit — and change the face of philanthropy as we know it.
A plaque on the wall of Liam Krehbiel’s childhood home in Chicago reads, “With every opportunity comes a responsibility.” His great-grandfather founded Molex in 1938, and as it grew to become a Fortune 500 company, the business afforded the family ample opportunity. But unlike his younger brother Jay who followed in his father’s footsteps at Molex, Krehbiel, 39, saw his responsibility differently.
“I knew from a young age that I didn’t want to join the family business,” he says. “When I was 8, it was because I wanted to play for the Chicago White Sox. But eventually, it was because I wanted to chart my own course. And my family was always supportive of that.”
Krehbiel earned a bachelor’s degree in history from Dartmouth College and an MBA in finance and marketing from the Kellogg School of Management at Northwestern University. He worked as a management consultant at Bain & Company before launching his own endeavor — A Better Chicago — in 2010.
A Better Chicago aims to transform education by transforming philanthropy. Its mission is “to dramatically improve educational opportunities for low-income Chicagoans by funding and scaling the most effective schools and programs in our region.”
Krehbiel, who has two young children with his wife, Karen, chose to tackle education for a very simple reason: He believes that education is the single most important issue of our time.
“If we really want to address our society’s most pressing issues, we have to focus on root causes, not just symptoms,” he says. “And education is at the root of so many of the challenges we face in this country today, including poverty, unemployment and crime.”
A Venture Philanthropist Takes on Education
In Krehbiel’s own backyard, only 14 percent of Chicago Public Schools students graduate college by the age of 25, according to a 2014 study by the University of Chicago Consortium on Chicago School Research.
To improve that number, A Better Chicago uses a venture philanthropy model that harnesses best practices from the private sector to drive social impact. This model drives the process of finding and funding grantees, and of creating educational opportunities for the region’s low-income, at-risk population.
“Philanthropy is underperforming as an industry. Resources are not making their way to the most effective solutions. I believe we can accelerate the change we all want to see in our society by applying best practices from our private sector cousins, who understand how to identify and scale high-potential solutions,” he says.
Borrowing the best thinking from the private sector, A Better Chicago employs a rigorous due diligence process before selecting organizations to fund.
Since 2011, A Better Chicago has assessed more than 450 nonprofit organizations. Currently, its portfolio of 12 organizations includes:
- One Million Degrees, which empowers low-income community college students to succeed and has received $350,000 from A Better Chicago.
- Reading In Motion, an early education literacy program in which A Better Chicago invested $350,000.
- Citizen Schools partners with middle schools to expand the learning day for low-income children across the country and has received $315,000.
“We’re highly selective,” Krehbiel says. “We weed out 95 percent of the organizations that apply before they even get to the due diligence process.”
That process takes about two months, 150 hours of A Better Chicago staff time and up to 30 interviews with the organization’s staff, board of directors, other funders, stakeholders and program participants. It also includes a return on investment analysis to estimate the lifetime increase in earnings for program participants, as well as a financial analysis to ensure A Better Chicago is funding only financially sound organizations.
“We bring the same level of focus on metrics to philanthropy that the private sector brings to business,” Krehbiel says.
Through this detailed process, A Better Chicago looks to answer four main questions:
- Does the program produce transformational outcomes for its participants?
- Does the leadership have what it takes to build a strong, successful organization?
- Is the organization on solid ground financially and operationally?
- Is the model scalable?
“We’re not just looking to fund an organization that helps 100 people in the community,” he says. “We look at organizations that can deliver outcomes and grow.”
In order to help them grow, A Better Chicago not only provides grantees with funding but also works with them on business planning, board development, branding, communications and talent acquisition to ensure long-term success.
“We think of our grantees as our partners, not just recipients of our money,” he says.
Changing the Philanthropy Conversation
Since inception, A Better Chicago has received support from over 700 donors, touched nearly 23,000 lives through the schools and programs in its portfolio, and delivered more than $11 million in value to its grantees.
But beyond the numbers, A Better Chicago is changing the philanthropy conversation in Chicago. “There’s a robust nonprofit sector here, but we’re helping to steer the conversation toward being more focused on results than in the past,” Krehbiel says. “As much as we scrutinize our own dollars, other funders should be doing the same.”
Just as he learned as a child, Krehbiel believes that others born into significant wealth have a responsibility to pay it forward.
“If you’re fortunate enough to be in a position to give back, it’s your responsibility to do so,” he says. “You have to give back, and give back generously.”