Social Innovation Jobs

If you are interested in some exciting opportunities to be part of the social innovation movement, one of my clients, SW Key Programs is hiring two positions:  Director of Business Development and Director of Development.

The Director of Business Development will help SW Key streamline and grow their social enterprise (earned income) activities.  They currently have 3 social enterprises and would like to see those thrive and look at potential other opportunities as well.  It’s a great opportunity to make social enterprise a growing reality in Austin.

The Director of Development will help SW Key build their philanthropic revenue from individuals, corporations and foundations.  Again, it’s a very entrepreneurial opportunity to build something from the ground up and make a real difference in how one of the largest nonprofits in Austin creates a sustainable revenue engine.

And another one of my clients will be hiring in January, so stay tuned for other social innovation opportunities.

Tags: jobs, Social Enterprise, social innovation

Profile of a Social Entrepreneur: YouthBuild

Social entrepreneurial organization YouthBuild rebuilds lives and communities by helping disadvantaged youth work toward a high school diploma or GED while they build affordable housing for their community.  They are simultaneously solving two problems facing communities across the country:  poverty and homelessness in an innovative way.  And they’ve seen great results.  In the 14 years they’ve been in operation, YouthBuild has worked with 76,000 kids to build 17,000 housing units in 226 of the country’s poorest communities.  And they have grand growth plans.  They want 50,000 youth enrolled in their program each year.  It’s an impressive story.  Watch this Skoll Foundation Uncommon Heroes video about them:

Tags: Skoll Foundation, social entrepreneur, YouthBuild

Capacity Capital

Everyone recognizes that the nonprofit sector is sorely undercapitalized.  But how do we solve that without a major overhaul of how nonprofit organizations and financial markets are structured?  Yes, those things do need to happen, but in the meantime there are things we can do to improve the nonprofit sector’s ability to generate more revenue.

Many nonprofit organizations here in Austin and the Southwest region lack sufficient fundraising infrastructure.  They don’t have a big enough donor base, efficient and effective technology, expertise in the various methods for raising money from diverse areas, messaging that is clear, concise, compelling and investment worthy, or a plan for turning things around.  With an investment in technology, planning and expertise and a commitment to make real changes, a nonprofit can achieve real results in their revenue generation abilities.

However, it can be difficult to find that initial investment.  Nonprofit budgets are extremely tight, and even tighter in the current economy.  Capacity capital isn’t just sitting around.  However, a nonprofit could put together a convincing pitch to someone close to the organization (a board member, a long-time donor) and demonstrate the return that such an investment could have.

Let me give you an example.  Nonprofit ABC (completely fictional) currently raises $400,000 a year from foundation grants, events, individuals (via direct mail mostly), and a few corporate gifts.  They have a fairly inefficient donor database. They spend too much time, money and energy on an annual event that nets (not including staff time) $50,000.  They do very little online communication or solicitation.  They do almost no major donor cultivation and solicitation. They have two development staff members:  a development director who only has 2 years of experience and a grant writer.  Their board is not involved in fundraising at all, yet they have some capacity and connections.  Their foundation grants (totaling about $100,000) will probably dry up in a year or two when the foundations want new projects to fund.  Their individual giving, approximately 1,200 donors with a small average gift of $150, totals almost $200,000.

Nonprofit ABC could put together a pitch for “capacity capital” of $30,000 which will help them pay for:

• new donor database
• online marketing/giving technology
• new collateral
• fundraising consulting

Then, with the help of a fundraising consultant they could put together a comprehensive development plan, purchase and integrate a new donor database that allows them to better track and upgrade and grow their donor base and launch a major gifts campaign, purchase and integrate new online marketing tools that allow them to better communicate with and more cheaply raise money from online constituents, create new collateral with more concise and compelling messaging focused on impact, and so.  The result over the next year or two could be hundreds of thousands of dollars in revenue.  They could go from a $400K a year organization to a $600K+ organization.  An investment of $30K resulting in a $200K per year increase is a pretty impressive return.

We did something similar on a larger scale at KLRU.  We took $350,000 worth of investments from a handful of donors and board members and turned that into a $1.6 million annual increase in revenue.  You can read the case study to learn more.

I think there is something to this idea of “capacity capital.”  A relatively small investment in smart, strategic revamping of an organization’s fundraising function can result in a dramatic increase in their revenue generation abilities, paying dividends for years to come.

Tags: Fundraising

Radical Transparency for Nonprofits

This is a (perhaps) final update to my earlier posts here and here about FORGE, a nonprofit working in African refugee camps to promote peace and stability but that is struggling to stay afloat. Curtis Chang the consultant from Consulting Within Reach who Sean Stannard-Stockton, of Tactical Philanthropy, asked to provide an analysis of what it would take to turn FORGE around has submitted his final report. And because of this final report, and Sean’s own discussions with FORGE’s Executive Director Kjerstin Erickson, Sean has been convinced that FORGE is a worthy endeavor and has made his own $1,000 contribution.  His decision to invest, however, was not purely based on FORGE’s work or their potential to turn things around.  Rather, Sean based much of his decision on his appreciation of FORGE’s “radical transparency:”

It is incredibly important that we build more trust within philanthropy. It is incredibly important that we move away from soliciting donations via a “sales pitch” and shift it towards a process of making a well reasoned argument centered on impact potential. FORGE hasn’t sugared coated things for us. They haven’t pushed pictures of the refugees they help at us. They’ve explained their situation, made a well reasoned argument for why they think they deserve funding and they’ve openly accepted any and all criticism with grace and humility. FORGE gets my money.

In fact, FORGE has raised half of their $100K deficit for this year. So, perhaps they are on their way.

I have my doubts, however.  In Curtis’ report he details a needed major overhaul of FORGE’s board, their infrastructure and their overall fundraising function.  FORGE’s board lacks refugee expertise and the network and capacity to raise funds from individual donors.  Curtis also points out that FORGE has little hope of raising money from foundations, corporations or governments.  That leaves individual contributions.  However, he points out that FORGE currently lacks a board that can help with that, a donor database and cultivation system, fundraising expertise and a network.  Those seem like some pretty huge hurdles to me.  So what is the plan to overcome them?

It seems to me the biggest roadblocks facing great social entrepreneurs like Kjerstin (and I do think she is a great social entrepreneur because she pairs vision with action) are the capital and strategic management expertise necessary to scale and become sustainable.  Lack of transparency in the social sector is not a major hurdle.  It would be great if we had more transparency in the social sector, and the financial sector as well, for that matter.  But transparency is not what is holding organizations like FORGE back, and it is not what will turn them around.  There needs to be major changes in the way resources flow to organizations and models that are really making a difference and creating positive outcomes.  And these resources are not limited to just financial ones, they also include strategic expertise about how to create a viable business model, how to plan for and achieve sustainable growth, how to create a sustainable revenue engine and so on.  We can’t expect our social entrepreneurs to be able to do it all on their own.  And we can’t simply reward them for sharing their lack of expertise or the hurdles that they encounter.  We need to provide the resources they need to bring their ideas to fruition in a sustainable way.

Tags: FORGE, Fundraising, nonprofit, scale, social entrepreneurs, transparency

Foundations’ Role in a Tough Economy

What should foundations do in an economy that has seen their assets fall by almost 30% but also has created enormous need among the nonprofits they fund and the people those nonprofits serve?  Charitable foundations are required by law to distribute (to grantees and foundation administrative expenses) at least 5% of a rolling average of their endowment each year.  They can do more, but not less.  In times like these when their return is not even close to 5%, it can be difficult to think about giving more than 5%.  Many foundations are determined to preserve the corpus of the foundation in perpetuity.  However, there is a debate raging among philanthropists, nonprofits, advisors and thought leaders about how foundations should respond in these difficult times.

First, here is how foundations are responding:

• The Foundation Center has created an interactive map detailing where and how foundations are giving in response to the economic crisis.
• Philantopic is keeping a running post of statements from foundations on how they will respond to the economic crisis.

Then, here is how people think they should be responding.  Here are just a few examples:

• Paul Brest, head of the Hewlett Foundation, wrote a blog post about the difficult position foundations are in, and he encourages them to “ensure that the best organizations — those that are delivering real outcomes — weather the storm. We’re not going to be able to salvage them from the bottom of the sea after the storm is over.”  He also warns of the importance of investing now in issues that need our immediate attention: “dollars spent today to address issues like global warming can do more good than dollars spent in ten years, when mitigating climate change will certainly be much more expensive if it is even possible.”
• Todd Cohen, editor of Philanthropy Journal, wrote a stinging post in the Stanford Social Innovation Review Opinion Blog against foundations that are prioritizing preserving their corpus above giving back to the community: “Instead of pitching fits about the plunge in value of the endowments they count on to perpetuate their power, foundations should be digging deeper and paying out more to begin to give back what they and their donors have received from taxpayers in the form of tax breaks and tax-exempt benefits.”
• Sasha Dichter, Director of Business Development for the Acumen Fund (a venture philanthropy fund working to end global poverty), wrote a piece about how the Weingert Foundation’s announcement that they were going to now support operating costs for nonprofits demonstrates how out of whack the funding apparatus for nonprofits has gotten: “The result…is that we end up with scores of nonprofits twisting themselves into knots to manage a series of too-small, too-specific “program” grants, with individual donors asked to pick up the difference between what’s funded and what’s needed to deliver on the non-profit’s mission (weren’t the foundation supposed to be the trailblazers in this equation?).”

This is a worthwhile debate and absolutely critical to the social sector going to the next level and creating solutions to the many problems that face our country and our world.  But it is not just about foundations.  They are only part (and a very small part) of the resource engine that drives the social sector.  The entire way in which the social sector is capitalized needs to change.  We need to put a financial priority on the solutions that the social sector is coming up with.  Those solutions need to be scaled and made sustainable. And adequate capital (from all sources) is the only way to do that.

Tags: Economy, Foundations

Across the Pond: Perspectives on Social Innovation in London

Earlier this week I met a fabulous ally in the movement to accelerate social innovation in Austin and the Southwest region.  Jessica Shortall recently moved to Austin from a 3-year stint in London.  She has a very impressive social innovation resume.   She started as a Peace Corps volunteer in Uzbekistan conducting community development projects and teaching English.  She then spent four years as co-founder and co-director of The Campus Kitchens Project, a U.S.-based social venture with a network of integrated leadership development, nutrition education, job training, food rescue, and hunger relief programs run by university students.   After earning an MBA at Said Business School, Oxford,  as one of five Skoll Scholars in Social Entrepreneurship, she started Catalyst Strategy Advisors advising social businesses on growth strategy, income-generation, and marketing and positioning. You can listen to an audio interview with her from a few years back on the SocialEdge website.

I asked Jessica to write a post on the social innovation movement in London and what Austin can learn from what is happening there.  Here is her post:

Although I’m American, I’ve lived in London for the past three years, and have just moved to Austin to settle down. I was lucky enough to meet Nell last week, and she asked me if I’d share some thoughts on the “social innovation” scene in which I’ve been involved in the UK.

First, some of my own definitions of this “field” of social innovation.  I would exclude from this category, at one end, non-profits doing traditional direct service, without attempting to make any systemic impact on the problem (not that these don’t have a very important place in the ecosystem). On the other end, I’d leave out anything termed “Corporate Social Responsibility”.

In between is a world of varying approaches to making the world a fundamentally better place. You’ve got non-profits doing innovative work at the root causes of problems. On my best days I’d like to think The Campus Kitchens Project, which I helped get off the ground, is one of those non-profits. There are social enterprises taking a commercial approach to their social impact – trying to run a business that covers both its operational and “social” costs with earned income. In Austin, there’s a social enterprise called English at Work doing just that. Then you’ve got “social businesses” that want a bit of both – make some money, run a solid business, but focus on social benefits. The UK’s Cafédirect, which  holds 5% of the UK hot drinks market, is such a company. Its tea, coffee, and cocoa farmers are major shareholders in the company, as are some UK foundations and retail investors, who receive dividends. Finally, there are those “ethical businesses” who want to do well by doing good. I’d put Whole Foods, the clean tech industry, and websites with social benefits (such as the UK’s JustGiving.com, which is very profitable) in this category.

The most interesting thing to me about London’s development of the spectrum of social innovation is how many angles people are approaching it from in order to build a thriving sector. It’s got a long way to go, but consider these elements:

• Public sector: A Cabinet-level “Minister for the Third Sector” who focuses much of his time on social enterprise.
• Foundations: A “foundation for social entrepreneurs” makes small grants to people across the country wanting to test out ideas for social change. Another foundation has an incubator that invests in social innovation-based businesses in education and health. There’s also an informal monthly breakfast for foundations to talk about innovations in social finance and confidentially share ideas and deal flow.
• Social Investors: There’s a small fund called Venturesome that is making loan guarantees for charities to access debt, and innovative quasi-equity deals to social enterprises. Body Shop entrepreneur Gordon Roddick has a small portfolio of social businesses and enterprises into which he has invested equity, commercial-rate debt, “soft” debt, and grants, and which he supports with networks, advice, and his deep knowledge of fast-moving consumer goods.
• Academia: The Skoll Centre for Social Entrepreneurship at the business school at Oxford is a center for research on social entrepreneurship globally. London’s School for Social Entrepreneurs is a non-profit that helps budding social entrepreneurs get their ideas off the ground.
• Big and small ideas: Year round you can find events that help social entrepreneurship and innovation bubble up around London. Make Your Mark for a Tenner, part of the national Enterprise Week (another cool thing) challenges young people to make the most out of a ten-pound note. Social Innovation Camp – something I’d love to see happen in Austin – brings together web geeks and social media people with folks who have new ideas about how to use the web for social change.

In my month or so in Austin, I’ve met with a lot of passionate, intelligent people who share a sense of optimism with the social innovation sector here in town. This city has so many of the core elements to become a truly world-leading center for social innovation, creative social financing, and social entrepreneurship: Entrepreneurs, with all their knowledge, experience, and risk-taking spirit. Great wealth. A concerned and interested citizenry. Passionate and energetic non-profit professionals. Strong charitable foundations. A growing economy. World-class universities. Austin and London have these things in common, if little else – sunny skies and smiles at strangers on the street are pretty rare in London, and so far it doesn’t look to me like Austin is a short plane ride from Amsterdam.

So how to get there? I certainly don’t have that answer. But in the London example, a lot of people and organizations in many different sectors and industries are involved (and they don’t always agree). I think the starting point is when people begin to talk to each other in open-ended conversations that ask, “What if…?”

Imagine foundation directors regularly talking to each other, to their boards, and to social entrepreneurs about ways they could use their endowments more creatively, and actually piloting some interesting equity, quasi-equity, or debt deals with promising social enterprises in town – maybe even losing some money from time to time.

Imagine networks where social entrepreneurs can connect with each other and with investors and advisors, the way “regular” entrepreneurs do.

Imagine entrepreneurs and corporate volunteers bringing their business brains to the table to help social entrepreneurs marry “social” and “business” to create a thriving new class of enterprises in Austin.

Imagine the mayor’s office declaring “Social Innovation Week” in Austin, with workshops, competitions, and a Social Innovation camp like the one held in London.

It’s an ecosystem approach, where things swirl and evolve over time, with different players watching for patterns; making connections; providing physical, social, intellectual capital; and taking risks.

I’m going to be watching my new hometown in the coming months, and trying to learn more and more from the amazing people already thinking about and doing this stuff right here in Austin. I am really looking forward to being part of it.

Tags: London, Said Business School, Skoll Centre, Social Entrepreneurship, social innovation, UK

Fundraise with a Soul

In an update to my earlier post about FORGE, a nonprofit working with refugees in African camps to promote peace and social stability, there has been a lot of activity trying to save the organization.  Some donors have stepped up and a few consultants have come forward to try to revamp their fundraising and marketing efforts.  It remains to be seen whether these efforts will save the organization, but the discussions have been very interesting.

Curtis Chang, CEO of Consulting Within Reach, a San Francisco nonprofit consulting company, is working with FORGE to turn their fundraising around.  He has written a really interesting post on Social Edge about how FORGE’s attempt to take the Kiva model of online microfinance and turn it into a fundraising model was fundamentally flawed.  If you recall from my earlier post, FORGE’s original funding model had student volunteers responsible for fundraising for the programs they created.  Earlier this year, FORGE scrapped that model and moved their fundraising to an online giving program where donors could pick projects to support.  The new model has been a flop, and FORGE is $100,000 in the hole.

Curtis argues that a funding model needs to be built around the organization’s soul:  what it is that they are about and do best:

A nonprofit’s funding model is not just a purely tactical decision to maximize revenue. Its strengths or flaws can’t be just the product of marketing. And the coolest website can be soulless. A fundraising model works best when it is a natural extension of the essential qualities of an organization: its founding characters, narrative, relationship to its audience – all that makes a great…story.

Its archetypical story is of Kjerstin Erickson as a 20 year old junior dropping out of Stanford to go work in refugee camps. She rallies other college students to the cause. Soon, FORGE is filled with other young, idealistic college students doing the same – and raising some key operational funds to keep FORGE growing.

Tags: FORGE, Fundraising, nonprofit

Ideas for Change

In the midst of chaos comes opportunity.  While the current government is trying to figure out the financial meltdown, the President-elect is assembling his cabinet, the ice caps are melting and two wars wage on, the chaos can seem a bit overwhelming.  But at the same time innovation in the social space is taking off.  People are coming up with and implementing new ideas to tackle some of the world’s most intractable problems.  And in an unprecedented way it seems that everyone is talking about possible solutions to the many problems we face.  Here are just a few examples.

In his column this past weekend, David Brooks talked with Michael Porter, economic expert from the Harvard Business School, about positive things an Obama administration could do to turn the economy around.  At the end, Brooks offered his own idea for addressing the economic turmoil:  a network of social entrepreneurship investment banks:

These regionally operated semi-public funds would invest in the best local community organizations, so they could bring their ideas to scale. These funds, first proposed by the group America Forward, would supplement the safety net and employ college grads entering a miserable job market. They’d have a powerful psychological effect on a country that desperately wants to feel mobilized and united. This is a mental recession as well as an economic one. Solving it means getting more and more people involved in a fundamental rebirth.

Getting more and more people involved in finding solutions is exactly what Change.org, a social network of people and nonprofits, has launched with their “Ideas for Change in America” effort.  They have taken Obama at his word, in asking Americans to be involved in their own democracy again, by asking people to submit their ideas for solutions.  The top ten winners, voted on by the Change.org community, will be submitted to Obama on inauguration day.  There are some pretty interesting ideas.  They include: creating a citizen news organization, developing a national youth policy council, restoring rail service, and launching a public service academy.

The best antidote to the chaos that surrounds is the hope that ideas like these bring.

Tags: Change.org, innovation fund, Obama, Social Entrepreneurship

Young Philanthropy Turns the Page

There is a very interesting article in Barron’s this month about GenX philanthropists and how they could completely change the face of philanthropy.  In the midst of what will likely be a philanthropy downturn given the economic climate, young philanthropists are stepping up much earlier than their elder counterparts did.  These GenX philanthropists (aged 28-42) are giving much earlier than older philanthropists who began giving in their 50s and 60s once they had amassed a sizeable amount of wealth.  And young philanthropists are determined not just to contribute to charity, as their grandparents and parents did, but rather to have a significant impact and make a real difference.  They want to be involved in the organizations they invest in.  And in fact, these GenX philanthropists are already more generous than their parents.  In 2006 GenX millionaires gave an average of $20,000 to nonprofits, double the charity of their parents and grandparents.

They are also blurring the lines between philanthropy and profit.  As Peter Kellner, managing partner of Uhuru Capital Management, a hedge fund that will invest 5% of its profits to entrepreneurial ventures in developing markets, says: “[We] combine the desire to achieve and the desire to do good. Why should we artificially separate these two drives in our everyday lives?”

Although the article doesn’t mention it, I would argue that this young breed of philanthropists is also more interested in bringing solutions to scale and investing in the capacity and long-term sustainability of nonprofit organizations.  Young philanthropists are interested in impact and the convergence of creating profit and creating social good. It follows, then, that they would be interested in projects that have a high social return on investment, through expanding a nonprofit’s impact and/or making it more sustainable.  So, for those organizations looking to scale and build sustainability, you might target young philanthropists to invest in your organization.

Tags: Philanthropy