Can PRIs Support Fundraising and Capacity Building?

Lucy Bernholz is hosting a great conversation on her Blueprint Research and Design website called “What Capital When?” As part of their work with the John D. and Catherine T. MacArthur Foundation in their Digital Media & Learning initiative, Blueprint is hosting this online conversation around the theories and strategies of program-related and mission investing to advance knowledge and research in the field. They asked that I do a guest post on using PRIs (program related investments) to improve the fundraising effectiveness of nonprofit organizations. Below is that post. You can also read the post on their What Capital When site here, and you can read the whole series here.

I think there is a tremendous opportunity that most foundations and nonprofits are missing.  PRIs (program-related investments) are an under-used tool that could provide much needed capital for nonprofits to transform how they finance social impact.

PRIs are loans that foundations make to nonprofits at low, or no interest.  At the end of the loan period (typically 3-7 years) the loan is repaid, or forgiven.  PRIs are usually used for capital projects or land purchases in the nonprofit world.  But they could also be used to increase the fundraising capacity of a nonprofit organization, through increased fundraising knowledge, planning, tools and staffing.  The current economic climate seems like the perfect opportunity for this new use of PRIs when foundations are trying to hold on to their dwindling corpus while maintaining their past level of community support.

A nonprofit could use a PRI to improve their fundraising infrastructure in several ways:

• Create a strategic development plan. Many nonprofits don’t have the expertise or time to put together a strategy for how they will bring money in the door.  With funding to hire an outside consultant to put together such a plan, the nonprofit would have a much better chance of increasing their fundraising revenue.
• Get fundraising training for their staff and board. If a nonprofit staff and board have the tools and expertise for successfully raising money, they will be more likely to do so.
• Hire a seasoned Development Director. Many nonprofit organizations can only afford to pay the bare minimum for a Development Director, which means that they are often forced to hire someone with little experience who must learn on the job.  If instead they had enough funding to pay a market rate salary for a seasoned fundraiser, they could hit the ground running, increasing the likelihood of fundraising success.
• Purchase a new donor database. A key element to success in individual donor fundraising is an organization’s ability to capture and use data about donors and prospects.  A good donor database makes this effort easier and more successful.
• Upgrade their website, email marketing, social media efforts. As direct mail appeals (a nonprofit fundraiser’s traditional standby) continues to become less and less effective, nonprofits need to move effectively into the online world.  Funds for technology upgrades and staff could help them do this.
• Launch a major gifts campaign. The vast majority of private funding in the nonprofit sector comes from individuals (80+%), so to stay competitive nonprofits need to move into the world of major gift solicitation.  But that takes expertise, staff, collateral and other infrastructure elements.

These are just a few examples of how nonprofits could make investments to strengthen their fundraising efforts. But currently it is difficult to find funding to support things like this.

But a PRI could provide an initial investment that sets the nonprofit on a path toward more diversified, more sustainable fundraising for the social impact they are working to create.

There are tremendous benefits to a PRI program like this.  First, for the foundation:

• Increases their ability to meet past levels of giving, despite any losses they might have found in the market, because the loaned money will eventually come back to them.
• Encourages their nonprofit grantees to be proactive in creating fundraising streams that will make them more sustainable.  Thus, increasing the likelihood that their nonprofit grantees a) won’t have to come back to them year after year for ongoing support and b) will become more sustainable and thus achieve greater social impact.
• Stretches their capacity-building dollars further. Because PRI money eventually comes back to the foundation, they can increase their level of impact by helping more nonprofits improve their capacity than they could with grants alone.
• Increases the level of accountability among nonprofit recipients because of the expectation of repayment.

And second, for the nonprofit:

• More diversified and sustainable fundraising streams.
• Increased fundraising knowledge and experience.
• Increased ability to work towards social impact.

Although PRIs used in this new way seems, at least to me, to be an obvious win-win, very few foundations are doing it.  PRIs in general are used (according to the Foundation Center) by only a few hundred of the thousands of grantmaking foundations in the country.  And I know of only one example of a foundation using a PRI to upgrade the fundraisng capacity of a nonprofit (the KDK Harman Foundation in Austin just launched a program like this last Fall, but does not yet have any participants).

So what is holding foundations back from launching a PRI program like this?  A number of things:

1. Nonprofits lack the expertise to put a plan together and pitch it to foundations. This is where Social Velocity comes in to help nonprofits create a plan to upgrade their revenue function and pitch that plan to foundations and other funders.
2. Most foundations  have an aversion to capacity building funding and prefer that their money go to direct program service.  However, as more nonprofits can demonstrate to funders that capacity building actually results in even more impact, this aversion can be alleviated.
3. Foundations lack awareness of or experience with PRIs.  However, this is changing, especially in the last year when the poor economy has made foundations increasingly interested in finding alternative ways to maintain community investment levels.
4. Foundations that are experienced with PRIs are not aware of using them to improve a nonprofit’s fundraising function.

So there is a disconnect.  But I am optimistic that as nonprofits learn to put a plan together to upgrade their fundraising function and articulate to funders how PRI’s could finance it, more examples of this new use of PRIs will surface.

Tags: Blueprint Research and Design, Development, Foundation Center, Fundraising, John D. and Catherine T. MacArthur Foundation, KDK Harman Foundation, Lucy Bernholz, nonprofit, PRIs, program-related investments, What Capital When

The Power of a Case

Most businesses that are looking for funding know the power of a case for support, although they probably call it their “pitch” or “deck.”  But most nonprofit organizations don’t have an articulated case for support, and this is a real missed opportunity. A case for support is absolutely critical to any kind of fundraising campaign, in the nonprofit or for-profit world, and whether the money sought is investment capital or operating revenue.

A case for support lays out a clear, articulate, compelling argument for why someone should invest in the solution you are providing the marketplace.  Nonprofit organizations do tend to put together a case for support when they embark on a capital campaign to raise significant money for a new building.  But a case for support should be the fundamental building block to ANY fundraising campaign.  Without a case for support, nonprofits are just holding out a tin cup.

I’m not suggesting that a nonprofit create a case for support and then trot it out whenever they meet with, mail or talk to a potential donor.  Rather a solid case for support is a starting point from which the nonprofit can pull arguments and language for use in every aspect of their fundraising operations:  website, appeals, thank you notes, presentations, major donor calls, foundation proposals, etc.

The very exercise of a nonprofit board and staff creating a case statement can be, in itself, transformative.  It makes the organization as a whole articulate why someone should invest in them and what the payoff is.  This articulation can energize and focus the organization and make their fundraising efforts that much  more effective.

A case for support has some key elements:

1. The Need (Market Opportunity)
   What social problem exists in your community, region, state, country, world that needs to be addressed?  Why is this problem significant, why should people care?
2. The Solution
   What is your solution to the social problem? Why is this the right solution?
3. Competitors and Competitive Advantage
   Why is yours a superior solution to other alternatives out there? Something that is often missing in nonprofit articulations of their case is how their solution fits into the competitive landscape.
4. Value Proposition
   Why is your organization uniquely positioned to deliver on this solution?  What is the value proposition you offer and how do your core competencies feed this solution?
5. Resources Required
   How much money, what type, and over what timeline do you require for this particular project (start-up, growth, increased capacity, general operating, etc.)? This section will vary based on the fundraising campaign.
6. Projected Social Return on Investment
   What does the potential investor get by investing in your organization (change to a social problem, increased breadth or depth of service delivery, etc.)?  If you can demonstrate a social return on investment, that’s great.  If you can demonstrate an increase in program and operational efficiency (in the case of a capacity building fundraising campaign) then do.

A full case for support is not something you would normally share with potential donors.  However, the process of articulating your case for support and then using elements of it in all of your fundraising work can dramatically increase your ability to effectively communicate with and secure investments from donors.

Tags: capital campaign, case for support, Fundraising, nonprofit

What We Can Learn From Idealist

At the risk of going against the crowd, I’d like to add my perspective to the Idealist crisis.  Idealist.org is a job site for nonprofit organizations that has been around for 10 years.  It’s a great site that brings nonprofit organizations and aspiring nonprofit job seekers together.  It has launched many a great career, including that of Rosetta Thurman, nonprofit consultant and Gen Y leader who is a huge supporter of the site.

Earlier this week Ami Dar, Executive Director of Idealist, sent out an emergency appeal for funding to Idealist supporters.  It seems that the recession has taken a serious toll on the nonprofit organization, and they are desperate for funding to stay afloat.  Ami’s impassioned appeal has made its way around social media sites and raised quite a stir. They are hoping it will bring in some serious donations.  And it seems to be doing that–you can see the running tally of recent donations on their homepage.

I admire what Idealist does and think they serve a real need, but with this campaign they are making a mistake that nonprofits sometimes make when they hit a crisis like this.  An appeal for emergency funding can raise quite a bit of money, for a time, but then what?  What is the long-term plan? How will Idealist overcome the obstacles that got them to this place so that they can emerge stronger, more effective and more financial sustainable in the future?

In his appeal, Ami says that the weak economy got them to this place because of a significant decrease in job posting revenue over the past 16 months.  That is completely understandable.  But over those past 16 months what has Idealist done to diversify their funding model?  What has been the result of those changes?  And what are their plans for the future?  Ami is fairly vague on these points:

Very briefly, here’s what happened. Over the past ten years, most of our funding has come from the small fees we charge organizations for posting their jobs on Idealist. By September 2008, after years of steady growth, these little drops were covering 70% of our budget. Then, in October of that year, the financial crisis exploded, many organizations understandably froze their hiring, and from one week to the next our earned income was cut almost in half, leaving us with a hole of more than $100,000 each month. That was 16 months ago, and since then we’ve survived on faith and fumes, by cutting expenses, and by getting a few large gifts from new and old friends. But now we are about to hit a wall, and this is why I am reaching out to you.

I understand why they are in this position. But what I don’t understand is how they are going to get out of this position after the emergency funds that they are attempting to raise dry up.  According to Ami, their plans for the future are:

If in the next week or two we can reach everyone who’d give us a hand if they knew we are in trouble, I believe we’ll come out of this crisis even stronger than before. I believe this because while this has been a tough stretch, I’ve never been more optimistic about the future. The content on Idealist has never been richer, our traffic is surging, we are building a whole new Idealist.org that will be released later this year, and the potential for connecting people, ideas, and resources around the world has never been more urgent or more exciting. Your contribution will allow us to maintain all our services…and it will also give us some time to diversify our funding. Being able to breathe, recover, and plan ahead for a few months will be an incredible blessing.

If Idealist hasn’t been able to figure out financial sustainability in the last 16 months, why should I think that they will be able to do it in “a few months”?  And scarier still is the fact that economist are predicting that the jobless economic recovery will continue for the foreseeable future.  So I’m not sure “a few months” is really going to change things all that much.

What I would like to see from Idealist is a bold plan for action, a revamped business model that will allow them to continue to provide needed services to the nonprofit community in a financially viable way.  Emergency funding is great, but only if it is a stop gap measure that will get an organization through a very specific, finite period of time and that on the other side of the crisis is a new business model for a viable way forward.

I think the nonprofit sector can learn something from Idealist’s crisis.  There are many other nonprofits in this same position.  And many who are contemplating or have launched an emergency appeal.  But keep in mind, you can only cry wolf once.  So while you are working to stay afloat, you also need to be taking a hard look at how to radically change your approach, your business model, your funding streams. And you need to put those changes into a comprehensive plan and communicate that plan to your funders. In that way, you all will know that you won’t be back here again.

UPDATE: The Tactical Philanthropy Blog hosted a debate between Nell Edgington and Rich Polt from Louder Than Words about the Idealist appeal.  You can read the debate and comments here.  

Tags: Ami Dar, Idealist.org, Rosetta Thurman

Let’s Take a Step Back in the Outcomes Debate

There is a growing discussion among social impact organizations and those who fund them about how to measure impact.  It is indeed a very slippery endeavor.

Mario Marino, Chairman of Venture Philanthropy Partners (a venture philanthropy fund in Washington D.C. that makes growth capital investments in nonprofits) has been encouraging nonprofits to measure outcomes for years.  Indeed one of the fundamental characteristics of venture philanthropy is a reliance on metrics and outcomes for investment to happen.  He recently wrote a post arguing that he is “increasingly worried that the vast majority of funders and nonprofits are achieving, at best, marginal benefit from their efforts to implement outcomes thinking.”  He argues that in an zealous pursuit of metrics we have left common sense and “softer” impact behind and encouraged nonprofits to move away from the impact they were working towards.

To add further confusion to the outcome measurement discussion, the Gates Foundation’s Melinda Tuan studied 8 approaches to measuring cost vs. social impact, or the value that nonprofit organizations create versus the cost of their activities.  The results of the study were disheartening; none of the approaches they studied was a magic bullet, all had significant drawbacks, which led them to conclude: “Integrated cost approaches to measuring and/or estimating social value are still in the nascent stages of development due to the lack of maturity in the field of social program evaluation.”

And there are other camps working towards outcome measurement, like those debating about whether randomized control trials (a research methodology where a random group of program participants is tracked and compared to a random group of cohorts who did not participate in the program) are feasible for nonprofits. And on the social business side, the GIIN (Global Impact Investing Network) is developing standards for measuring and communicating the social impact of investments known as The Impact Reporting and Investment Standards (IRIS).  And that’s just a start.

This whole social impact measurement endeavor is incredibly important because if we can figure out a way to measure which social change efforts work, and which don’t, we can allocate resources accordingly and, in theory, get closer to solutions to social problems.

But I think we need to first take a step back.  As is so often the case in efforts to build nonprofit capacity, effectiveness and infrastructure (including, in this case, the ability of nonprofits to evaluate their work) the focus is on the largest, most resourced nonprofit organizations.  Let’s remember that more than 80% of nonprofit organizations have budgets under $1 million (see the Nonprofit Almanac).  Budgets that small leave very little room for funds to support randomized control trials or other kinds of outcome measurements.

But an even bigger roadblock is the fact that many nonprofit organizations have not articulated their theory of change, or their logic model.  Many nonprofit organizations are doing good work, but they don’t necessarily have an articulated strategy around that good work.  A logic model helps an organization understand and articulate how they believe that they translate resources (inputs) into social impact, or change in a community.  This understanding allows the organization to better articulate (to potential funders, volunteers, supporters, partners), and create strategy around, their work.  A potential logic model for an English as a Second Language after-school program could be as follows:

One of the first steps Social Velocity undertakes with clients who want to increase organization capacity, sustainability, revenue, growth, or really any kind of progress, is to create a logic model with the organization.  The majority of nonprofits that I encounter don’t have an articulated logic model or theory of change.  It may seem like an academic exercise, but I would argue that it is absolutely critical to just about anything a nonprofit does.  In order to understand their place in the community, the value that their work adds, how additional inputs (like funding) can increase impact, and their strategy for delivering services, they need to articulate this process.

But the larger debate about outcome measurement ignores the fact that the majority of nonprofit organizations have not completed step 1 in outcome measurement: articulating a strategy for using resources to create outcomes.  Once this is articulated, we can talk about how to measure whether that strategy is actually coming to fruition.

Tags: Gates Foundation, GIIN, IRIS, logic model, Mario Marino, Melinda Tuan, Nonprofit Almanac, outcomes, randomized control trials, social impact, Social Velocity, theory of change, Venture Philanthropy, Venture Philanthropy Partners

Losing the Charity Mindset

Along with the burgeoning social entrepreneurship movement comes a bit of hubris that social entrepreneurs know better how to create social change than do the nonprofits that have been working toward social change for years.  Some social entrepreneurs argue that nonprofits are too set in their ways to embrace a new way of creating solutions.  I tend to disagree.  We can’t, nor should we, discount and dismiss an entire sector of people and organizations that have been working on social problems for centuries.  However, I do think that there are some things that nonprofits can learn from social entrepreneurs.  One of those is how to lose the charity mindset.

Nonprofits are sometimes referred to as “charities,” and it is a real misnomer.  But beyond semantics, the word, and more importantly the mindset, does a real disservice to organizations working toward change  A charity mindset is when an organization, its board, its funders or others promoting its work have a narrow view that the organization is benevolent, but not critical, to the world at large.  The charity mindset assumes that a nonprofit starts from the position of need, inadequacy, and burden, rather than a position of opportunity, strength, and effectiveness.  The charity mindset differs from a social entrepreneur mindset in a number of ways:

• Symptoms vs. Solutions: A charity, by its very definition, exists to provide aid to the needy, not to solve the underlying cause of the need.  This is not to say that every nonprofit can work toward solving an underlying problem; there will always be organizations that exist simply to provide basic needs (food, shelter, safety, etc.).  But I wonder if too many nonprofit organizations view their work as residing in the “charity” camp, instead of working, as social entrepreneurs do, to understand the cause of the need and how how they may be able to attack and solve it.




• Fundraising: A fundraiser in the charity mindset apologizes for the burden of asking someone for money, but a social entrepreneur offers investment opportunities to prospects.  Wendy Kopp from Teach for America went around evangelizing the Teach for America story and sought investors who wanted to get in on the ground level of an incredible opportunity to change the American public education system.




• Investment in Infrastructure: Charities spend every last penny on the program and leave little money for building the organization.  Social entrepreneurs understand that it takes organizations, infrastructure, systems, and talent to effectively execute on a solution to a social problem.




• Respect: Charities may be beloved by their supporters, but they may not garner a lot of respect from them.  Social entrepreneurs behave as equal partners with funders in creating solutions, and, as such, they command and receive real respect from investors, volunteers, partners and others.




• True Costs:  Charities like to claim that as much money as possible goes to direct services, but social entrepreneurs recognize the true costs of their endeavors and are open and honest with funders about those costs.  In fact they demand that funders understand and support those true costs.

I think the old adage is true, people will treat you the way you ask to be treated.  If a nonprofit acts like a charity, people will treat it like one.  Nonprofits need to stand up and demand to be treated as critical, equal partners in creating solutions.

Tags: charity, Fundraising, Nonprofits, Social Entrepreneurship, Teach for America, Wendy Kopp

Financing not Fundraising

As we approach the end of a pretty difficult year for nonprofit fundraisers, and look towards the start of what could be an equally difficult one, I’d like to outline a new vision for how the nonprofit sector gets funded.  Fundraising in its current form just doesn’t work anymore.  Indeed, traditional fundraising is holding the sector back by keeping nonprofits in the starvation cycle of trying to do more and more with less and less.

Really, what the sector needs is a financing strategy, not a fundraising strategy.  By that I mean that nonprofits have to break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all of their activities.  Instead, nonprofits must work to create a broader approach to securing the overall FINANCING necessary to create social change.

What does this new approach to financing the nonprofit sector look like?  It looks like this:

1. Nonprofits understand that funding programs and general operating expenses is not enough to survive and thrive.  All activities that bring money in the door (individual donors, foundation grants, earned income, government contracts, loans etc) are integrated and part of a larger financing strategy that supports the short AND long term goals, as well as the programs AND infrastructure of the organization.




2. Nonprofits no longer segregate fundraising from their other activities (programming, administration).  All elements of a nonprofit’s operations, including the money-making ones, are fully integrated and moving forward together.




3. Individuals, who make up 80%+ of the private money entering the sector, become a greater focus of fundraising efforts, rather than corporate or foundation philanthropy (which make up 5% and 12%, respectively, of the private money entering the sector).




4. Fundraising messaging moves from an emphasis on the tin-cup mentality and donor benefit, to an emphasis on the social impact a  nonprofit is creating.




5. Money is raised to support not only the direct services that a nonprofit provides, but also the infrastructure (staff, technology, systems, evaluation, training) of the organization.  Nonprofits understand that they will only get better at delivering impact if they have an effective organization behind their work.




6. Other types of capital vehicles (like loans, equity) are added into a nonprofit’s financing mix.




7. Earned-income opportunities are evaluated and, if appropriate, launched.  Earned income is not right for every nonprofit, but it is worth exploring and analyzing opportunities as they come and understanding and being open to the revenue-generation possibilities.




8. The net revenue of every money-making activity a nonprofit engages in (events, individual fundraising appeals, corporate sponsorships, earned income, etc.) is calculated and evaluated.  Low net revenue activities are replaced with higher net endeavors.




9. Nonprofits move away from “push” fundraising and marketing efforts that force their message on innocent bystanders (like direct mail appeals) and towards “pull” fundraising and marketing efforts that bring interested donors/prospects to the organization (like blogs, Twitter, Facebook, friend-raising events, etc.)

There really is a better way.  Nonprofits don’t have to wear out their fundraisers, their donors, their staff and their message.  By working towards financing their efforts as opposed to fundraising for them, they can get a lot closer to social impact.

Tags: direct mail, Financing, Fundraising, nonprofit, Philanthropy, social change

Building a Stronger Organization

We all know the nonprofit sector is really struggling.  Particularly in the midst of a deep recession it can be difficult to figure out how to get out of a vicious cycle of increasing demand for services, relentless fundraising, diminishing capacity and so on.

But there is hope.  In order to break free of the starvation cycle of trying to do more and more with less and less, nonprofits need to make big change.  And in order to do that they need to figure out what is holding their organization back.

Most consultants offer nonprofits what they call an Organizational Assessment.  But I hate the term, and I don’t hold much stock in the results. The solutions they offer to what’s holding a nonprofit back tend to be rooted in what the nonprofit sector has been doing wrong for too long.  Most Organizational Assessments are not bold enough, they don’t push nonprofits to understand and articulate their own theory of change, look at entirely new revenue streams, get rid of non-performing board members, completely revamp their mission, focus their marketing efforts, create a real strategic plan, and so on.

What nonprofits need is an Organization Building Plan. It can transform a nonprofit, give them an understanding of where they stand currently and what it will take to really strengthen the organization and their ability to make social change.  An Organization Building Plan gives a nonprofit a clear, executable road map for making their organization work better, smarter, more effectively, more sustainably.  It demonstrates how to integrate better all aspects of the organization (program, funding, marketing, operations, board, etc), make the organization more sustainable, expand the net of supporters (funders, volunteers, board members, friends), deliver programs in a way that increases social impact, and increase the strengths of the organization, while addressing the weaknesses.

If a nonprofit can strengthen their organization, they can deliver more social impact. Indeed, I would love to see every nonprofit organization with a well executed Organization Building Plan.  So what does a good one look like?

An outsider (it must be an outsider, because, as we all know, someone close to the organization won’t have the heart or the vision to see what is really wrong and how to fix it) interviews board, staff and funders, reviews organization processes, policies, procedures, documents. They then analyze and create detailed recommendations for improvement in the eight key areas of a nonprofit organization:

1. Mission and Vision: How these basic pillars of the nonprofit galvanize internal and external people to create change.
2. Strategy: How the organization comes up with and executes on a plan for the work of the organization.
3. Program delivery and impact: How the organization delivers social change.
4. Governance and leadership: How the board and key staff drives the organization forward.
5. Finances and revenue generation: How financially strong and sustainable the organization is.
6. External relationships: How strong and effective important collaborations and partnerships are in the work of the organization.
7. Marketing and communications: How well the organization gets in front of the right audiences in a compelling way that drives action.
8. Operations, systems and infrastructure: How well the organization makes use of resources.

Doing Organization Building Plans is one of my favorite services we offer at Social Velocity.  When I deliver the results to a client’s board and staff it is thrilling to look around the room and see the mix of shock, awe, relief, excitement, energy, innovation.  Finally someone has taken a hard look inside the organization and come up with a new direction that opens a whole new world to the organization.  Ideas start flying around the room “We could do this…”, “What if we did that…”  It serves as a rallying cry to begin to build the organization.

At Social Velocity we are all about big, not incremental, change.  An Organizational Assessment can make a nonprofit incrementally better.  An Organization Building Plan can transform how an organization works, dramatically increasing productivity, sustainability, and ultimately, social impact.

Tags: Fundraising, mission, nonprofit starvation cycle, organizational assessment, vision

Philanthropy Drives Arts Education Forward in Austin

The kick-off of Austin’s MindPop collaboration was this morning.  MindPop, which I’ve written about before, is a collaboration of a handful of leading Austin philanthropists hoping to improve access to arts education for all Austin children.  They want to understand what is holding our kids back from learning about and experiencing the arts and what needs to change in the infrastructure of the city in order to fill those gaps.

The project has 3 phases:

1. Gap Analysis to determine what is missing in the arts education ecosystem in Austin
2. Creation of 4 bold goals to solve those gaps
3. Distribution of close to $180,000 in grants to fund capacity building of the overall system and of individual nonprofit arts organizations

So today was the launch of the project with about 75 of the who’s who in Austin’s philanthropic, education, and arts worlds in attendance.  The keynote speaker was our new Austin Independent School District superintendent, Meria Carstarphen, who obviously has tremendous passion for the importance of arts education.  Her recent arrival in Austin is itself a real opportunity for change to the system.

As inspiration for Austin’s foray into building this collaboration, Gigi Antoni, CEO of Dallas’ Big Thought, was there to explain how her organization led Dallas from a community that dismissed most of their art and music teachers in the 1970s, to a comprehensive, fully funded in- and out-of-school arts learning environment.  Over the course of the last 12 years, Big Thought has brought together philanthropists, educators, arts organizations, schools, parents, and community leaders to create an ecosystem for arts education that ensures that all Dallas children have a rich art-centered learning environment both in school (90 minutes of arts instruction for every student every week) and in their communities (music camps, rehearsals, rec center activities, etc).  For Gigi, the big transformation was that Dallas went from a bunch of individual solutions and organizations that were providing “random acts of change” to a “completely changed environment that works as a SYSTEM” to create arts education for every child in Dallas.

I have to admit that I am a bit skeptical about whether what worked in Dallas will work in Austin.  We have a tendency in this city that I love to talk and plan and envision a future, but sometimes find it difficult to move towards action, perhaps part of that stems from a lack of infrastructure and capacity.  So what I am really excited about with MindPop is not the gap analysis and the creation of 4 ideas for solutions.  I have no doubt that the gap analysis will be thorough and the ideas for solutions creative and exciting.  I am most interested that a group of five very influential philanthropists (family foundations, a corporate foundation, and the Austin Community Foundation) is pooling their resources and efforts toward a common goal, and more importantly, toward building infrastructure and an ecosystem for the arts education sector.  Often it is the infrastructure that is missing in true solutions.  Ideas are great, and so many fabulous ones exist.  But the real hurdle is taking a great idea and building the infrastructure, support, ecosystem behind it to create results.

The other exciting thing about this project is that it could become a model for funder collaboration and ecosystem creation that could be replicated in other nonprofit issue areas.  What if all of the education, or healthcare, or youth development, or environmental funders in town got together and decided that they wanted to create an ecosystem of money, expertise, organizations, solutions that could work together towards system-level, not individual program level, change?  That would be pretty interesting.

I’m thrilled that these philanthropists are working so closely together, putting money and resources behind this collaboration, and being very public and transparent about the process.  I would love to see more philanthropists putting their resources behind big picture, infrastructure-building solutions.

I plan to keep my eye on this project, and I’ll keep you posted.

Tags: AISD, Austin, Austin Community Foundation, Big Thought, Capacity Building, Dallas, Gigi Antoni, Meria Carstarphen, MindPop, philanthropists

2010 and the Future of the Social Sector

Lucy Bernholz, head of Blueprint Research and Design, a philanthropy consulting firm, and thought-leader on trends in philanthropy is preparing a monograph on what 2010 will hold for the social sector. As a true adopter of social media, she is asking others to contribute, in essence crowd-sourcing answers, this year to her annual “what will next year bring” treatise. Last week, she asked her blog readers, Twitter followers, and all others the question: “What trend, change, entity, or idea will matter most to the social sector in 2010?”

She’s gotten a great set of responses, in blog, email, Tweet, and other forms, which she and others are collecting. It’s kind of an interesting experiment to ask a broad question to the universe and see what you get back, and whether it is intelligible and adds anything to what she may have already been planning to write. It is also interesting to navigate the very fine line between future-telling and wishful thinking. I probably tend to fall into the latter category, but if we don’t envision the future we want to see, we probably won’t get there.

I submitted my thoughts to Lucy via Twitter, but it is difficult to distill broad ideas into 140 characters, so I will elaborate on my thoughts here.

There are three things that I think will matter most to the social sector in 2010:

1. Increased Philanthropic Dollars Will Go to Organization Building. Donors will increasingly realize that they can achieve a greater social return on their investment (more social impact) when they invest in the capacity, or growth of a successful nonprofit.  That is to say that donors will increasingly realize the power of BUILDING organizations rather than BUYING services.  I don’t think donors will move away from buying services, there will still be a majority of that.  But I think donors will start to understand the difference between a “donation” where they are simply supporting an organization’s current program, versus an “investment” that makes the organization stronger, healthier, better positioned to address the social problem head on.




2. Nonprofits Will Move From Outputs to Outcomes. And in order to meet this trend of donors wanting to invest rather than donate, nonprofits will begin to understand that they will attract more capital if they can demonstrate a social return on investment, or a change in outcomes, not just outputs.  Outputs have been a favorite of the nonprofit sector, i.e. 500 kids went through our after-school program, 1,000 meals were served in our kitchen. But outputs don’t demonstrate social impact, or a change to a problem.  Outcomes do, which is what investors increasingly will want to see.  Outcomes are about changed lives, changed trajectories.  It is so much more powerful and compelling to be able to say that the 500 kids that went through our after-school program stayed in school and increased their academic achievement which was a marked difference from their cohorts that didn’t attend our program.  Then, if you can continue to track those children and demonstrate that they continued to stay in school at a higher rate than their contemporaries, you have a compelling change to a trajectory.  You begin to show how your organization is an intermediary between donors who want to invest in social change and a change you are making in the community.  I believe that philanthropic capital will begin to flow more readily to those nonprofit organizations that can demonstrate outcomes as opposed to outputs, and those nonprofits that can comply will be more successful at attracting capital.




3. The Social Capital Market Will Increasingly Include Philanthropic Capital. The social capital market to date has focused mostly on investing in social businesses that provide both a social and financial return. Philanthropy and nonprofit organizations have been somewhat left behind. But this will change with a growing recognition of the benefits of broadening the definition of social capital markets to include nonprofits and philanthropy.  There is much to be gained when ALL organizations working towards social impact and ALL investors interested in social return can pool resources and work towards closer collaboration, creation of new financial vehicles, sharing of ideas and information.

Perhaps 2010 is too early for all three of these trends to really take hold, but I think the beginnings are there. It will be interesting to see what Lucy comes up with, and what actually starts evolving in a few short months when the new year begins.

But in the meantime, what are your thoughts?  Where do you see the social sector going in the coming year?

Tags: 2010, Blueprint Research and Design, Lucy Bernholz, nonprofit, outcomes, philanthropic capital, Philanthropy, social capital market, social impact, trends