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

Convergence Can’t Be Denied

There is a fascinating debate going on in the blogsphere touched off by Michael Edwards, author of  Small Change: Why Business Won’t Save the World and former director of the Ford Foundation’s Governance and Civil Society program.

In essence, the debate is about whether the convergence of the private (business) and the nonprofit sectors is a good or bad thing, whether market forces help or hurt social change efforts.  Michael kicked off the debate on Monday with the first in a week-long series of posts called “Should Civil Society Be Reduced to a Subset of the Market?” In subsequent posts he went on to attack the emerging social capital market among other things.  You can read the whole series here.

Sean Stannard-Stockton, of the Tactical Philanthropy blog, took up the charge and debated many of his points.  Then the two have gone back and forth over the issues. And the debate expanded on the New Philanthropy Capital blog where Tris Lumley wrote that Michael’s argument “boils down to social capital markets vs civil society – impact measurement vs social justice, data vs values, competition vs solidarity. And in this binary view of the world, he threatens to undermine the very real progress that’s being made towards a much more balanced and realistic perspective.”  Michael responds and so does Tris.

It seems to me that fundamental to Michael’s argument is his fear about the growing convergence between the nonprofit, private and government sectors.  That somehow the “market” will sully social change efforts.  Michael argues that civil society and the market are separate entities: “Civil society operates on solidarity and commitment—the willingness to hang in there for the long haul even if results don’t go your way. Markets work on the opposite principle, “exit”: consumers are free to move from one supplier to another whenever and wherever they like. Otherwise the efficiency of resource allocation would suffer.”

But the fact is that social change efforts and the nonprofits leading them have always existed within a market economy. Resource allocation to nonprofits is very much based on a market. If nonprofits can’t convince donors or governments that their work is important or has meaning, they won’t receive resources.  Nonprofit funders are consumers who are “free to move from one supplier to another whenever and wherever they like.”  It would be great if social change efforts could exist in some sort of vacuum where their good work automatically finds resources, but the world doesn’t work like that.  And as resources for social change efforts become increasingly competitive, nonprofits, and for profits working towards social change, have to become smarter about responding to the marketplace. And as the marketplace demands more social change efforts, which is increasingly the case, more resources will be brought to bear on those social change efforts, thus the creation of the social capital market.

The growing convergence among the public, private and nonprofit sectors is a reality we can’t avoid.  Nonprofits have to respond more effectively to market forces, governments have to be more efficient in their allocation and use of resources, and businesses, in order to survive in a marketplace that increasingly values social good, have to understand and respond to the effects their products and services and business model have on the broader society.

Binary systems and separated sectors just don’t exist anymore.  The lines are blurring.  The market is part of the reality of social change efforts.  To deny that is silly.

Tags: Ford Foundation, Michael Edwards, New Philanthropy Capital, Sean Stannard-Stockton, Small Change, Tactical Philanthropy, Tris Lumley

Social Impact Finance

It’s a new year and a new decade, and both hold tremendous promise for creating real social change.  And key to significant social change is a fundamental restructuring of how we finance that change.  I think (hope) that in the next decade we will see the emergence of a new Social Impact Finance.  And I imagine it will look something like this:

• Social Impact Funds Become Commonplace. Experiments like the Federal Social Innovation Fund (which combines government and private money to fund the growth of proven nonprofit models), Village Capital Fund (seed funding for social entrepreneurs, determined by social entrepreneurs), social investment funds like Good Capital, and venture philanthropy funds like New Profit and SeaChange Capital Partners are expanded and become commonplace.  Seed and growth funding for nonprofit, for-profit, and hybrid social impact organizations becomes more readily available and accepted.




• Foundations Get Risky. Foundations deny their risk-aversion heritage and provide risk capital for social innovation, whether through their customary 5% cap for nonprofit donations, or social investments from their corpus, or by foregoing dreams of perpetuity and giving all their money away on a big bet or two.  See Nathaniel Whittemore’s great post on this.




• Individual Donors Become a Powerhouse. Technology finds a way to harness the power of individual donors toward significant social change. Currently, individual donations make up the vast majority of funding entering the nonprofit sector, yet their gifts are fragmented. With the potential of a new nonprofit rating system on the horizon, and social media’s growing ability to gather and marshal individual participants, there could be a pivotal shift in how individual donations flow to the nonprofit sector, and how significant those individual donations become to nonprofits creating demonstrable social impact.




• Nonprofits Understand the Power of Finance. Nonprofit organizations understand and become successful at financing their overall operations, instead of fundraising for them.  And they begin to think bigger about their work, the overall outcomes they are trying to achieve and how finance fits into that (The GiveWell blog did a great series on the “Room for More Funding Question.”)

The end result of these and other changes will be, I hope, that “Social Impact” and “Finance” are no longer separate terms that have no bearing on each other, but instead inextricably linked concepts that create a better world.

Tags: GiveWell, Good Capital, Nathaniel Whittemore, New Profit, SeaChange Capital Partners, Social Innovation Fund, Village Capital Fund

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

Texas Social Innovation Initiative Virtual Press Conference

I mentioned in an earlier post that Social Velocity will be one of the consultant teams working on OneStar Foundation’s Texas Social Innovation Initiative (TSI).  The TSI is a partnership between OneStar, Root Cause, and Dallas Social Venture Partners, which gives each of seven innovative Dallas/Fort Worth nonprofit organizations, who competed among 60 nonprofits, more than $25,000 in cash and strategy assistance to support their growth and impact.

The seven nonprofit winners will be announced this Wednesday at the Governor’s Nonprofit Leadership Conference in Dallas.  As part of that announcement there will be a virtual press conference at 10:30 a.m. CST featuring a discussion by leaders in the nonprofit sector about how to stimulate social innovation in Texas. Participants are Elizabeth Darling, president/CEO of OneStar Foundation; Stacy Caldwell, executive director of Dallas Social Venture Partners; and Andrew Wolk, CEO of Root Cause. To participate in the conversation you can watch the stream on the Social Velocity blog below, and you can also follow the conversation on Twitter via the hashtag #TXSI.

UPDATE: The virtual press conference happened on Wednesday, December 9th, but you can still watch the taped virtual press conference here.

Tags: Andrew Wolk, Dallas Social Venture Partners, Elizabeth Darling, OneStar Foundation, root cause, Stacy Caldwell, Texas Social Innovation Initiative

Nonprofits and the Emerging Social Capital Market

Last week’s Social Capital Markets Conference was an amazing experience.  You really felt as though you were at the beginning of something pretty innovative.

The financial market collapse of the last year has given the emerging social capital markets, where social impact and money converge, a voice and credibility.  Indeed some social investments, like those in the microfinance arena, have actually far outperformed the financial returns of the traditional capital markets in the past year.

Will it last?  And will money begin to flow more readily to organizations and projects that promise a social return?  Will, as some at SoCap forecasted (or perhaps hoped), impact investing become a significant part of a normal investor portfolio in the next five years? Will social impact become a necessary and prevalent part of the traditional capital marketplace? Who knows.   This whole space is evolving, and it is much too soon to understand how it will all play out.

One thing, however, that was lacking in last week’s conversations, and is worth a larger discussion, is how nonprofits, those organizations that have been creating “social impact” since before it was cool, fit into this emerging market. As I mentioned in earlier post, attendees to the session I moderated, “Growth Capital for Nonprofit Social Entrepreneurs,” appeared hungry for information, tools, advice, insight about how their organizations could play in this emerging space.

If you think of the overall market as a continuum with traditional charities on one end and traditional businesses on the other, the social capital marketplace, then, is everything in between.  It most certainly includes social businesses–businesses that not only make a profit, but also contribute some sort of social impact (like wind farms or organic groceries).  And there are emerging investment vehicles that can provide investors a financial return (sometimes equivalent to a traditional market rate return) in addition to a social impact return.

But the social capital market must also include new financial vehicles for nonprofit organizations. In order to effectively provide the public goods that for profit businesses (both traditional and social businesses) can’t or won’t provide, nonprofit organizations require seed funding, growth capital, capacity capital, loans, equity, grants, operating revenue and so on.

Although there was some discussion of these financial needs, the nonprofit side of the social capital market discussion was not as prevalent last week. And indeed some at the conference, including conference co-f0under, Kevin Jones, refer to nonprofits as “our cousins” in this space.  Indeed, the keynoter at the first SoCap conference  last year encouraged the audience to “set aside” nonprofit organizations because they were not what that conference was about.  And I have had a few conversations with leaders in the social business space who have told me: “Innovation will never come from the nonprofit side.  It must come from the social business side.”

But nonprofit organizations are very much part of this conversation and this emerging market. Social impact is not a new thing.  As much as those of us assembled at SoCap last week would like to believe that we are pioneers in all things, we are not.   Many of the financial vehicles emerging in this new space are exciting and new.  But creating social impact through entrepreneurial efforts is not new.

Nonprofit organizations have been around for a long time.  And their reason for being has always been to create some sort of public good that was not addressed by the market.  That is not to say that it has been done right.  Many would agree that the nonprofit sector and the philanthropy that funds it are dysfunctional, even broken.  And I think most of us would agree the government sector is fairly broken as well.

But we cannot discount and dismiss either sector.  In the true spirit of the social innovation space, we must recycle and reuse the nonprofit and government sectors, just as we are refashioning the private sector.  We must reconfigure the assets of all three sectors to turn them into more effective, more productive, higher functioning sectors that can work with, not separate from, each other to create solutions.

What does that look like?  It means that venture philanthropy funds are sharing investor prospects with social venture funds and vice versa.  It means that investors interested in a social return have portfolios that include not only social businesses, but also nonprofit deals.  It means that foundations are investing in both for profit and nonprofit social impact organizations.  It means that the SoCap conference list of attendees and speakers come equally  from all three sectors (public, private, nonprofit).  It means that the majority of nonprofit organizations that have an interest in and capacity for growth have access to growth capital and management expertise to scale.  It means that a nonprofit that is solving social problems is just as sexy and gets just as many resources, respect and mind-share as a social business that is doing the same. It means that those working on changing laws to help social entrepreneurs look at both for profit and nonprofit structures, incentives and restrictions.

The creation of the social capital market is a bold, chaotic, possibly insane, but potentially game-changing endeavor that has the power to completely rework how money flows through the market to shape society. Let’s not get bogged down in dichotomies and factions, rather let’s take a bigger picture view of the essence of what we are attempting to do.  And that is to completely reconfigure, and create a productive convergence among, the three sectors. Now that would be innovative.

Tags: capacity capital, government, growth capital, investors, nonprofit, Philanthropy, SoCap, social business, Social Capital Markets conference, social entrepreneur, social return

Organizing the Chaos

At the beginning of anything there is chaos, so it is with the creation of the social capital marketplace.  Day 2 of SoCap was about understanding and starting to discuss the chaos that is emerging in this marketplace.  As Antony Bugg-Levine from the Rockefeller Foundation said in the plenary about creating infrastructure for this new market, there are a lot of or’s right now, but we would like to make them and’s.  He meant that there are opposing ways of thinking about and doing things in this emerging market, but we would like to be at a place where we don’t have to choose, where we can have both, instead of just one of the options. Some of the or’s he mentioned are:

• Knowing vs. believing
• Measuring vs. doing
• Mission vs. scale
• Story vs. substance
• Metaphor vs. methodology

And I would add to that:

• Nonprofit vs. for profit
• Financial investing vs. philanthropy
• Venture philanthropy vs. Social investing
• Government vs. private money

And the list goes on.  The social capital market is emerging from a binary system of financial investment on one side and philanthropic donations on the other.  Mission and money never mixed.  That either-or, however, is becoming an and.  So too, are so many other distinctions.  It used to be that a nonprofit organization was about social impact and a for profit was about profit.  Now it’s both. And so on.

But what we are talking about is a radical shift in so many areas.  It can be overwhelming and chaotic.

But in order for this market to survive we need to organize it.  And that list is long:

• We need to create metrics for determining social impact
• We have to create various financial vehicles for the various projects and organizations out there trying to survive
• We have to change the rules and laws to make them more accepting of these new entities
• We need to figure out what business models make sense and can thrive
• We have to determine how and when to scale great ideas
• We need to drive down the high transaction and search costs in the field
• We, as entrepreneurs who dislike the bureaucracy of government, have to engage on a policy level to make change
• We have to effectively market and communicate the benefits of social investing in order to broaden the reach of the market beyond the few who have tried it

The list goes on and will take time.

There is such diversity at SoCap and that diversity is representative of the social capital markets themselves.  As one participant put it “We are 1,000 outliers.”  There are bankers, college students, nonprofit execs, philanthropists, VCs all brought together by a single desire to make money work better for the world. But that tremendous diversity can create dichotomies, distance, tension.

For example, the session I moderated yesterday on Growth Capital for Nonprofit Social Entrepreneurs. I feared that because the nonprofit side of the market had been under-represented at last year’s conference that there may not be much interest in the topic.  To my surprise, the room was absolutely full, with probably close to 80 people in attendance. And there was a palpable sense of hunger for information among the group about where nonprofits, who have been doing mission work for years, fit into this new market.

But day 3 of SoCap is about to start, so I will leave all of that for a later post.

Tags: Antony Bugg-Levine, nonprofit, Philanthropy, SoCap, Social Capital Markets conference, social entrepreneurs, social impact, Social Investing

The Beginning of a Movement

You really get the sense here at the edge of the San Francisco Bay at Fort Mason Center that you are at the beginning of something amazing.  There are 1,000 of us here at the second annual Social Capital Markets Conference (SoCap), and there are some amazing people, many of whom have been toiling away for the last decade or so trying to convince investors, funders, donors, organizations, governments that there is no longer a binary system of philanthropic money and investment money.  There is a third way where money can have a social and a financial return, and there are countless ways to do that.

Day One was amazing.  The opening plenary had Sonal Shah, the new head of the White House Office of Social Innovation speaking and then joining a panel of experts on government’s role in the emerging social capital markets.  Much of the discussion centered around the $50 million Social Innovation Fund recently approved by Congress, but really that’s such a small part of the potential for collaboration with government in this new movement.  The takeaway from the session for me was that because this is such a new movement, no one has a playbook, and it is really up to us, all of us, to chart this new territory and define and describe how we want government to be involved.  And government really must be involved because they have tremendous resources and the problems we are all attempting to solve cannot be solved without that 800-pound gorilla.  Exactly what the right role for government in all of this is, is still very much to be determined.  But I’m hopeful that we may have some clearer answers on that when SoCap10 roles around.

For the only Session block of the day I chose Sean Stannard-Stockton’s Donor Advised Funds session.  This was an eye-opener for me in terms of the power and opportunity that donor advised funds hold, on several fronts.  First, the minimum investment requirements to start a donor advised fund is declining.  You used to require $250K to start one, now minimums are as low as $25k, which means that these tools are now open to young, emerging philanthropists, which is very exciting since they might be the ones who are more willing to take some risks and innovate with their money.  Secondly, because the tax event happens when the initial donation into the fund is made, donor advised funds can act like a “third pocket” separate from the straight philanthropic pocket of money and the financial returns only pocket of money.  Kim Wright-Violich from Schwab Charitable described all sorts of exciting things that they are able to do with the aggregated sum of their donor advised funds.  They can guarantee microfinance institutions, be the guarantor on a loan that a nonprofit organization would otherwise not qualify for, make investments in social businesses, and so on.  Schwab and the other funds represented at the session are obviously on the cutting-edge of the use of donor advised funds. But imagine the impact if the donor advised funds at the community foundations that exist in most parts of this country took even a little bit of their money and started using it to make social or mission-related investments, make loans to nonprofits, experiment with microfinance, and on and on.  How much capital would that free up in new ways for the social capital markets?  It really boggles the mind and is an incredibly exciting opportunity.

Finally, the highlight of my day was the Plenary Session moderated by Matthew Bishop from the Economist and author of PhilanthroCaptialism, which gave an overview of the spectrum of the social capital market today.  And that spectrum ran from nonprofit venture philanthropy funds like Kim Smith from New Schools Venture Funds to Root Capital, a nonprofit social investment fund that provides capital to small farmers in developing countries, to a social venture fund, to a social investment fund that provides market rate return along with its social impact, finally to Jed Emerson of Uhuru, a hedge fund that donates part of its profit.  It was fascinating to hear about the various types of social capital that is occurring out there and where these pioneers see the hurdles and the trends.  Some top level comments from panelists that really made me think:

• We are performing 2 tasks simultaneously: using old financial tools in new ways, while creating new tools. We need to do more of the latter.
• We have worked to solve the governance issues on the for-profit side, but we have also known that governance was a huge problem in the nonprofit side for a long time, but have yet to do anything to change it.
• The social capital market is a big tent, we need to stop taking nonprofit/for profit sides and arguging about which ways is right and start sharing deals and complementing each others skills/expertise.
• We need to organize the space that is emerging between the previously binary markets (philanthropic and financial) that have evolved fairly efficiently, but separately.
• In the financial collapse, social investments far outperformed traditional investments, yet the majority of people went right back to the old binary system. We are all responsible for demonstrating that social investment is a better way and getting others on board.

The bottomline for me after this first day of listening to these intelligent, brave, entrepreneurial leaders in this emerging market is that although the field has grown in a year (for example last year SoCap had 600 attendees, this year it has 1,000) people who understand and work to enlarge the social capital market space are few and far between.  We are on the edge of a massive change to our financial markets and how we understood, and separated, our money.  But change takes time and it takes work to convince those who are comfortable with the old way of doing things, as Machiavelli wrote:

There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things.  For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order.

Change means risk, and people, for the most part, are risk averse. So let’s not get caught up in the excitement and the hype and think that the social capital market is massive.  There is still much work to do, but there always is at beginnings.

Tags: New Schools Venture Fund, Root Capital, Schwab Charitable, Sean Stannard-Stockton, SoCap, Social Capital Markets conference, Sonal Shah, Uhuru

Two Weeks to SoCap

Two weeks from today the 2nd annual Social Capital Markets Conference kicks off in San Francisco.  I’m pretty excited about it because I think one of the biggest things standing in the way of social innovation is a social capital market–the financial tools and vehicles necessary to adequately capitalize social innovation.  The speaker’s list for the conference reads like a Who’s Who of the social innovation world.  There are some incredible sessions, too many to choose from.  I wish the conference were longer than 3 days.  I’ll be tweeting (as much as my multi-tasking challenged brain can handle) and blogging from the conference.

Just a few of the topics to be discussed at this year’s conference include:

• The Social Capital Movement Across the Globe
• Social venture funds’ prominent role in the new economy
• The sophistication of social investing pioneers
• Raising money for impact investing in a downturn economy
• The Obama Administration’s focus on social innovation
• Creating effective collaboration between the private sector and development agencies
• Moving beyond Microfinance
• Market based solutions for the base of the pyramid
• New corporate structures, including hybrid businesses and L3C organizations
• Creating metrics and value around social change
• Mobile technology platforms worthy of investment

Are you excited yet?

One of the things I’m particularly excited about at this year’s conference is a movement toward including nonprofits and philanthropy in more of the conference.  Last year’s conference tended to focus a bit more on blended value investing (investing in social impact organizations that provide a social AND a financial return). But we don’t want to neglect those social entrepreneurs that employ a nonprofit model to create their desired social impact.

To that end, SoCap this year has a host of sessions about nonprofit social entrepreneurs  and a social capital market for them.  I am moderating one of these sessions, Growth Capital for Nonprofit Social Entrepreneurs on Wednesday, September 2nd at 1:30pm.  Darell Hammond of KaBoom!, Greg Baldwin of VolunteerMatch and Kelly Ward from America Forward/New Profit will discuss the growth capital that was used to bring some impressive nonprofit organization’s to scale.

If you are going to attend only one conference in the social innovation space this year, I would highly recommend SoCap.  Hope to see you there!

Growth Capital for Nonprofit Social Entrepreneurs

Date: Wednesday, September 2nd
Time: 1:30pm

Moderator: Nell Edgington, Social Velocity
Greg Baldwin, VolunteerMatch
Darell Hammond, KaBOOM!
Kelly Ward, New Profit and America Forward

Nonprofit social entrepreneurs like Volunteer Match and KaBoom! have become, over the past decade, very successful, national, multi-million dollar nonprofit organizations working to solve critical social problems. They’ve achieved this impressive scale through growth capital from individuals, foundations and venture philanthropy funds. Greg Baldwin from Volunteer Match and Darell Hammond from Kaboom will be joined by Kelly Ward from America Forward and New Profit, a pioneer venture philanthropy fund in Boston, to discuss the various financial tools available and necessary to scale nonprofit social entrepreneurs.

Tags: America Forward, KaBoom!, microfinance, New Profit, nonprofit, scale, SoCap, social capital market, social entrepreneurs, Venture Philanthropy, Volunteer Match