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10 Great Social Innovation Reads: April 2015

social changeApril was another busy month in the world of social change writing. From Google’s shift to mobile, to the Baltimore protests, to using sitcoms to change public opinion, to the pace of social change, to teens and social media, to a new way to measure a country’s performance, there was much to read and digest.

Below are my 10 picks of the best in the world of social change in April, but please add to the list in the comments. And to see what else I found beyond these 10, follow me on Twitter, Facebook, Google+, or LinkedIn.

And you can read past months’ 10 Great Reads lists here.

  1. There was much analysis about what went wrong in Baltimore, but I found the most insightful to be Dan Diamond’s Forbes piece about how it is fundamentally a “tale of two cities” and the persistent inequality between two very different Baltimores.

  2. As is Google’s way, they made a huge change to their search algorithm in late April that will affect us all. Google is now favoring websites that are mobile friendly. But fear not, Beth Kanter offers some advice for upgrading your nonprofit’s website.

  3. For those in the trenches, the pace of social change can seem glacial. But this great graphic from Bloomberg demonstrates that for many issues (prohibition, interracial marriage, women’s suffrage, same-sex marriage) there was a tipping point at which America very quickly changed its mind. Fascinating.

  4. Civic Tech, or using technology to make citizens more engaged and government more effective, is a huge investment opportunity, says Stacy Donohue from the Omidyar Network. With venture capitalists, the federal government and nonprofit and for-profit solutions all poised to make change, Donohue sees civic tech as a “very real, very now investment opportunity.” Let’s hope that new ideas and (most importantly) lots of new money can turn our struggling democracy around.

  5. Social change can happen in many different ways, including by altering popular culture. Former Daily Show correspondent Aasif Mandvi is attempting this kind of shift with his new web sitcom that takes a “Cosby Show” approach to portraying American Muslims in order to combat Islamophobia.

  6. Writing in Slate, Krista Langlois takes a hard look at her fellow environmental journalists and whether they have failed to adequately describe the environmental challenges facing our planet since American concern about climate change has actually declined in the last 20 years.

  7. One of the most common hurdles to nonprofits raising capacity dollars is the challenge of articulating to funders the potential impact of a capacity investment. Grantmakers for Effective Organizations (GEO) have put together some tools to help funders understand the importance of and return on capacity investments. Share these with your funders.

  8. In April, MIT and the Social Progress Imperative launched the Social Progress Index, an effort to create a complement to the Gross Domestic Product that measures a nation’s social and environmental performance. The Social Progress Index looks at 52 indicators of a country’s social and environmental performance (like child mortality rate, adult literacy rate, greenhouse gas emissions). As Michael Porter, one of the chief architects behind it puts it, “Measuring social progress offers citizens and leaders a more complete picture of how their country is developing. And that will help societies make better choices, create stronger communities, and enable people to lead more fulfilling lives.”

  9. Writing on the Huffington Post Politics blog, Robert Reich describes a worrying trend where nonprofits are silencing themselves for fear of losing their big donors. As he writes, “Our democracy is directly threatened when the rich buy off politicians. But no less dangerous is the quieter and more insidious buy-off of institutions democracy depends on to research, investigate, expose, and mobilize action against what is occurring.”

  10. And finally, if you want to understand where social media is going, Pew Research Center released their most recent findings about teens use of social media and technology.

Photo Credit: Patrick Neil

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The State of the Nonprofit Sector in 2015

nonprofit sector surveyEarlier this week the Nonprofit Finance Fund released the results of their 7th annual State of the Sector survey about the financial health of the American nonprofit sector. This on-going survey, now in its 7th year, has become a fascinating marker to gauge how the nonprofit sector is evolving amid a changing economic climate.

The Nonprofit Finance Fund launched the survey in 2008, when the economic crisis was just beginning. This year results from 5,451 respondents show some positive signs of adaptation and growth, but also recurring challenges that continue to face the sector.

You can see the full results of the survey here and slice and dice the data yourself with their Survey Analyzer Tool here. But here are some of the key findings of this year’s survey.

Nonprofits are unable to meet a growing demand for their services:

  • 76% of nonprofits reported an increase in demand for services – the 7th year that a majority have reported increases.
  • 52% couldn’t meet demand, the third year in a row that more than half of nonprofits couldn’t meet demand.
  • Of those who reported that they could not meet demand, 71% said that client needs go unmet when they can’t provide services.

Nonprofits still (not surprisingly) struggle to make ends meet. While some nonprofits are achieving financial sustainability (47% ended 2014 with a surplus, the highest in the history of the survey), many still face real challenges:

  • 53% report three months or less of cash-on-hand.
  • 32% find achieving long-term sustainability a top challenge.
  • 25% struggle to be able to offer competitive pay and/or retain staff.
  • 19% can’t raise funding to cover their full costs.

And these financial challenges are due in large part to the catch-22 funders place nonprofits in by routinely covering only a portion of the full costs of the programs they intend to support:

  • 70% of survey respondents receiving Federal funding report that the government never or rarely pays for the full costs of delivering services.
  • 68% of respondents who receive state funding say the state government never or rarely pays for the full costs of delivering services.
  • 47% of respondents who secure foundation funding report that foundations never or rarely cover their full costs.
  • While 89% of nonprofits are asked to collect data to capture the effectiveness of programming, 68% of funders rarely or never cover the costs associated with measuring program outputs or outcomes.

So we still have a long way to go.

But those nonprofits who are faring well in this environment are those being strategic. As one human services nonprofit leader put it:

“Sustainable funding continues to be our greatest challenge. Our actions to address this challenge include developing and adhering to a strong and dynamic strategic plan; diversifying our program funding streams as much as possible; developing and communicating a strong community impact statement for our programs; and focusing on increased donor engagement in order to increase fundraising dollars.”

You can dig further into the data from this and past years’ surveys here.

Photo Credit: Nonprofit Finance Fund

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10 Great Social Innovation Reads: March 2015

social changeWhat a great month March was. Just as the weather started to turn to Spring (I hope it did where you are too), there was a whole host of great reading to digest. From analysis of the new breed of philanthropists, to controversy about contest grantmaking, to mission investing progress, to tips and guides on nonprofit finance, leadership and financial advocacy, there was lots to read.

Below are my picks of the 10 most interesting reads in the world of social change in March, but as always, please add to the list in the comments.

And if you want a longer list, follow me on Twitter, Facebook, LinkedIn or Google+.

You can also see the 10 Great Reads lists from previous months here.

  1. Call me biased, but I think the biggest social change news in March was the launch of the Performance Imperative, a detailed definition of a high-performance nonprofit, by the Leap Ambassadors (of which I am one). Many reviewed the new tool, including Phil Buchanan from the Center for Effective Philanthropy who wrote that nonprofit performance is a “moral imperative.” And if you want to learn more, there is a webinar drilling down on the PI later this month.

  2. Who says online debate never results in change? There was a big discussion on the Chronicle of Philanthropy‘s site this month over the Council on Foundation’s plans to hold a “Shark Tank”-like contest for nonprofits. Many felt this contest would be a step backward, forcing nonprofits to perform for money, so the Council scrapped the contest and created instead a panel discussing the positives and negatives of contest-style grantmaking.

  3. F.B. Heron Foundation CEO, Clara Miller (formerly of the Nonprofit Finance Fund) is a true nonprofit finance visionary, and this month the Foundation passed the halfway mark on their goal of putting ALL of their capital toward mission. And writing in The Guardian, Tim Smedley would seem to agree with their goal when he makes the case for mission investing.

  4. Chris Gates (from the Sunlight Foundation) and Matt Leighninger (from the Deliberative Democracy Consortium) wrote a fascinating letter to the editors of the Chronicle of Philanthropy taking issue with Diana Aviv’s comments on recent Independent Sector research about technology and nonprofit institutions. Gates and Leighninger argue that there is great opportunity in technology if nonprofits embrace it effectively, as they put it, “It is true that the rise of the Internet is forcing institutions like governments, foundations, nonprofits, and professional associations to rethink how they operate. They have to adapt to the needs and goals of 21st-century citizens or perish. But ultimately, people want the same things they always have: to belong to a community, to have a voice, and to make an impact…if institutions can provide those things in this interconnected time, they will thrive.”

  5. American educators and education funders have focused in recent years on science and math to create a more effective and competitive American education. But Fareed Zakaria, writing in the Washington Post, thinks that’s a big mistake, “As we work with computers (which is really the future of all work), the most valuable skills will be the ones that are uniquely human, that computers cannot quite figure out — yet. And for those jobs, and that life, you could not do better than to follow your passion, engage with a breadth of material in both science and the humanities, and perhaps above all, study the human condition.” Amen!

  6. The fourth installment of Tom Watson’s on-going series about the changing face of American philanthropy focuses on the class of new, entrepreneurial philanthropists, those young, tech wealthy donors who are pushing for data-based social change. And Pascal-Emmanuel Gobry takes it even further arguing that “effective altruism,” what he calls this data-centered approach to philanthropy, is only one potential method of investing in social change, not the only or best approach. As he puts it, “making the world a better place is an inherently speculative behavior — if we knew how to do it we’d have already done it. Therefore the most prudent collective thing to do is to try a very wide swath of different approaches rather than a single one.” And as one of these new philanthropists, Facebook founder Mark Zuckerberg’s investment in Newark public schools continues to come under fire.

  7. The National Committee for Responsive Philanthropy put out a fantastic report on the need for more philanthropic investment in nonprofit leadership development. This should be required reading for every philanthropic and nonprofit leader in the country.

  8. The National Council of Nonprofits developed a guide for nonprofit leaders to advocate for their funding rights, particularly around indirect rates, with government funders.

  9. And there were lots of great tips and tools this month for becoming an effective financial leader. The Nonprofit Finance Fund released a list of tips to help “keep business and finance an integral part of decision-making.” And Kate Barr offered 6 Takeaways from the Nonprofits Assistance Fund’s annual Nonprofit Finance and Sustainability Conference.

  10. Finally, Jocelyn Wyatt from IDEA.org argues that general funding for nonprofits is the “future of innovation”. Yes please!

Photo Credit: BibBornem

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The Changing Nonprofit Landscape [Podcast]

nonprofit podcastEarlier this month I participated in a podcast conversation with Joed Lopez of Panvisio as part of their on-going Q2 Podcast series with social sector leaders.

We talked about:

  • How broken fundraising is
  • A more effective financing approach
  • Nonprofit fear of money
  • The passion of nonprofit leaders
  • The need to articulate a nonprofit’s message
  • Capacity capital
  • Social entrepreneurship
  • Nonprofit boards
  • And much, much more…

I really enjoyed the conversation and hope you will too.

You can listen to the podcast below, or click here to listen to it on the Panvisio site.

 

Photo Credit: Makingster

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Building a High Performance Movement: An Interview With Lowell Weiss

lowell weissIn today’s Social Velocity interview, I’m talking with Lowell Weiss, President of Cascade Philanthropy Advisors, which provides personalized guidance to foundations and individual donors seeking to deepen their impact. Previously, he served in leadership roles at the Bill & Melinda Gates Foundation, the Morino Institute, and in the Clinton White House.

Lowell is one of the leading architects of the Performance Imperative, a detailed definition of a high-performance nonprofit, which launched last week.

You can read past Social Velocity interviews here.

Nell: Why do the Leap Ambassadors believe now is the right time to introduce the Performance Imperative (PI) to the nonprofit sector? There have been past attempts to move the sector toward outcomes and performance. What makes this effort and this timing different?

Lowell: We don’t know if we’ll break through with this effort. But the 70+ members of the Ambassadors Community are committed to giving it our all, because we believe that performance matters more than ever. The social and public sectors are increasingly steering resources toward efforts that are based on a sound analysis of the problem, grounded assumptions about how an organization’s activities can lead to the desired change, and leadership that embraces continuous improvement.

High performance is all too rare in our sector today. In fact, we don’t even have a commonly accepted definition of the term “high performance.” The PI is our attempt to create that common definition and then start the process of creating guideposts to help nonprofits who are motivated to improve their performance for the clients and causes they serve.

We’re not aware of any other effort devoted to this mission-critical topic that has engaged so many top nonprofit executives, funders, and thought leaders as co-creators. Perhaps even more important, the PI goes beyond the typical focus on helping nonprofit leaders do things right. When leaders do things right, they can achieve strong operational performance but not necessarily meaningful results for beneficiaries. To achieve the results embodied in their mission statements, leaders must go the extra mile, through diligent internal monitoring and external evaluation, to ensure they’re also doing the right things.

Nell: Does the PI apply to any and all nonprofit organizations? Is it a measuring stick that any size and domain area nonprofit should use, or are there certain types of nonprofits for which this really works?

Lowell: We believe the insights in this document are most immediately applicable to nonprofit organizations with budgets of $3 million or more. But many of the basic management principles apply to organizations of any size, just in less-intensive ways. Some of the details have a special focus on organizations that provide direct services. We believe the overarching framework is relevant for organizations of almost any type.

Nell: What will keep the Performance Imperative from becoming a dusty document rather than a movement? What does success look like for this movement and how will you measure whether that happens?

Lowell: Let’s face it: The topic of high performance is not a lightning-fast meme that will spread like a left shark or right-wing conspiracy theory. It’s a slow, complex idea that will require patient, methodical work to advance. Hence the importance of the Leap Ambassadors Community, a group of leaders who care deeply about high performance and are willing to share the gospel with trusted colleagues and peers.

We believe that when leaders with strong beliefs and passion coalesce around a common purpose, they can build a collective power and influence to drive positive change. They can create an infectious enthusiasm to pull other like-minded players into a growing community of action. That can only happen when you take the time to build relationships, trust, quality work, and collective pride in that work. Overall, we’ll judge our success based on a) to what extent the PI becomes an established framework for increasing the understanding and expectation of high performance as a critical pathway to greater societal impact; and b) to what extent the Leap Ambassadors Community demonstrates itself as a thoughtful, knowledgeable, aligned community of leaders and earns respect, collaboration, and support from prominent players in the field.

To be more concrete about how we will know if we’re on the right track, we’ve established metrics for the growth and engagement of the Ambassadors Community as well as for the value of the PI itself. Here a few of the milestones we hope to achieve over the next year:

  • 100‐150 ambassadors have jelled as a community and are truly aligned with the community’s purpose.
  • At least 25 nonprofits commit to using the PI to assess their strengths and needs; increase the board’s focus on mission effectiveness; improve their professional-development and  organization-building efforts; or otherwise use the PI as a North Star to guide their journey toward high performance.
  • Three to five foundations adopt the PI for themselves and their grantees, and they begin to apply the PI in their grant decisions and grantee support.
  • Three charity ratings or information providers build the PI into their offerings.
  • At least two vendors prominently use the PI in their suites of products and services.
  • At least two prominent nonprofit management and leadership programs incorporate the PI as a core staple in their products and services.
  • At least one institution creates a prominent award aligned with the PI or adapts an existing award.

Nell: Where do funders and regulators fit into this push for higher performance in the sector? One of the things that holds nonprofits back from high performance is an inability to spend the money it takes to achieve high performance (money for infrastructure, evaluation, staff, etc.). How do we fix that and where does fixing that fit into the movement’s plans?

Lowell: Funders and regulators can and must play a role. Right now, I’m helping a multiservice agency transition from providing compassionate care to ensuring that its clients achieve meaningful, measurable, sustainable life outcomes. The agency is trying to live the PI. But here’s the sad reality: The journey toward high performance is making the organization’s development challenges harder, on net. That’s because there are so few funders who understand the value of high performance—and even fewer who reward it.

To make the leap to high performance, nonprofits need creative funders willing to think big with them—not just ask for more information on results. They need funders who understand that making the leap requires more than program funding and more than the typical “capacity-building” grant. They need funders who make multi-year investments in helping nonprofit leaders strengthen their management muscle and rigor.

That’s why we’re so supportive of the work of Results for America and the Coalition for Evidence-Based Policy, organizations that are helping governments to base funding decisions on evidence and results. And that’s why the Ambassadors Community is developing the case for high performance that we can start bringing directly to funders. Bridgespan Group Co-Founder and former Social Innovation Fund Director Paul Carttar and Center for Effective Philanthropy President Phil Buchanan are co-leading a working group of ambassadors to build the case for funders. They are planning to convene a dozen+ foundation leaders to help flesh out the most effective arguments and evidence we can assemble to persuade funders that they have a better chance of accomplishing their missions if they support their grantees’ pursuit of performance.

Photo Credit: Cascade Philanthropy Advisors

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What Is A High-Performance Nonprofit?

PI-Poster-WebPromoGraphic-580x750I’m really excited to announce today’s launch of the Performance Imperative. The Performance Imperative is a detailed definition, created by a community of nonprofit thought leaders, of a high-performance nonprofit. The hope is with a clear definition of high-performance we can strengthen nonprofit efforts to achieve social change.

As we all know, we are living in a time of growing wealth inequality, crumbling institutions, political divides, and the list of social challenges goes on. The burden of finding solutions to these challenges increasingly falls to the nonprofit sector. So “good work” is no longer enough. We need to understand — through rigor and evidence — which solutions are working and which are not.

The Performance Imperative was created by the Leap Ambassadors Community, a network of 70+ nonprofit thought leaders and practitioners of which I am a member. The group emerged from the 2013 After the Leap conference, which brought nonprofit, philanthropic and government leaders together to create a higher-performing nonprofit sector. The group is determined to lead the fundamental, and critical, shift towards a more effective nonprofit sector.

The Performance Imperative defines nonprofit high performance as “the ability to deliver—over a prolonged period of time—meaningful, measurable, and financially sustainable results for the people or causes the nonprofit is in existence to serve.”

The Performance Imperative further describes seven organizational pillars that lead to high performance:

  1. Courageous, adaptive executive and board leadership
  2. Disciplined, people-focused management
  3. Well-designed and well-implemented programs and strategies
  4. Financial health and sustainability
  5. A culture that values learning
  6. Internal monitoring for continuous improvement
  7. External evaluation for mission effectiveness.

Each one of these 7 pillars is fully explained in the Performance Imperative.

Over the next several months I will write a blog series that digs into each of these 7 pillars to understand what each one means for a nonprofit organization and to examine case studies of how other nonprofit leaders have approached the pillars. And next week on the blog I’ll interview one of the founders of this movement toward high performance.

Although the Performance Imperative is targeted toward $3M+ nonprofits, it can also be a benchmark upon which any social change nonprofit can measure itself. Nonprofit boards and staffs can use the Performance Imperative as a north star to guide their journey toward higher performance.

To learn more about the Performance Imperative, watch the video below (or here), or download the complete Performance Imperative here.

The critical necessity of a high performing nonprofit sector is clear. We no longer have the luxury of benevolent good works that sit aside the business of our country. Now is the time to find solutions that really work and develop the leadership and sustainability to spread them far and wide.

As Mario Morino, founder of the Leap Ambassador Community has said, “If we don’t figure out how to build high performing nonprofits, nothing else matters. This is the last mile. Our nation depends on it.”

 

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Fundamentally Changing American Politics: An Interview with Josh Silver

joshIn today’s Social Velocity interview, I’m talking with Josh Silver, Director of Represent.US, an organization building a movement to pass tough anti-corruption laws in cities and states across America.  His local approach to political and social change is a fascinating model. Josh is a veteran election and media reform executive and served as the campaign manager for the successful 1998 Arizona Clean Elections ballot initiative campaign. He is also the co-founder and former CEO of Free Press, a leading media and technology reform advocacy organization. He also served as the Director of Development for the cultural arm of the Smithsonian Institution.

If you want to read past interviews in the Social Velocity interview series go here.

Nell: With Represent.Us you take a city­-by­-city or state­-by­-state approach to political reform, instead of a nationwide approach. Why do you think a local approach holds more promise?

Josh: It’s all about momentum. Every poll available has shown that Americans of all political affiliations — conservatives, progressives, and independents alike — support tough, new anti-corruption laws. But, as with so many other issues, these wildly popular reforms are going nowhere fast in today’s Washington.

If we want to break the gridlock at the national level, we need to be pragmatic about where we focus our efforts. Rather than throw ourselves at a brick wall in Congress, we’re taking this fight to the thousands of cities and 27 states where we can use the ballot initiative process to bypass compromised local legislatures and put tough, new anti­-corruption laws directly to a public vote.

Focusing on city and state initiatives is both good policy and good politics. In policy terms, many state and local anti­-corruption laws are even more out of date than federal law and in significant need of reform. We can and should do everything in our power to make the exchange of money and favors for political influence illegal at every level of government.

In political terms, using a local ballot initiative strategy will allow us to start racking up wins immediately, showing an understandably cynical public that change is possible and building momentum for national reform. While self­-interested politicians might be reluctant to change the system that got them elected, the public will overwhelmingly vote for a local Anti­-Corruption Act if given the opportunity.

Advocates of marriage equality and marijuana legalization have seen huge success with the same strategy. 20 years ago, both issues faced seemingly insurmountable odds in Washington. By picking smart targets at the state and local level, they’ve managed to redraw the political map and set their campaigns on the path to national victory.

We’re running the same playbook, and it’s already working. On November 4, 2014, Tallahassee, Florida passed the first municipal Anti­-Corruption Act in the United States by a two to one margin. Now, campaigns for new Anti­-Corruption Acts are already in the works for twelve cities and two states in 2015 and 2016.

Nell: As you mentioned, your approach is part of a larger state­-by­-state reform trend, with movements like the state­-by-state legalization of gay marriage and of marijuana. Why does the state­-by-state approach work now and will we ever go back to federal­ level reform?

Josh: The state­-by­-state approach works because it allows Americans to take matters into their own hands when politicians refuse to act. Instead of worrying about local politicians carving out loopholes for themselves and their parties, the People can craft their own comprehensive reform plan, gather the signatures necessary to place it on the ballot, and put their local Anti­-Corruption Act directly to a public vote. Given the popularity of the reforms we’re talking about, these local Acts are very likely to pass, building the movement from the ground up and creating a domino effect which will spread from state to state and eventually Washington, DC.

Passing a statewide ballot initiative can fundamentally change a state’s political culture. It sends a clear message to every elected official in the state, including that state’s federal delegation. Every time we pass a statewide anti­-corruption act, it makes it possible for federal candidates in that state to run for Congress and win without the backing of big money special interests. So, every state we win means more members of Congress who support comprehensive nationwide reform. Once we’ve attained a critical mass of support in the states, federal level reform is inevitable.

Nell: A big part of what you do involves creating coalitions of strange bedfellows, for example Tea Party loyalists and progressives. How do you circumvent our current environment of the dismissive or openly hostile discourse between opposing viewpoints and get people to find some common ground and work together?

Josh: Americans self-­identify as roughly one-third Conservative, one-third Progressive and one-third Independent. Maintaining a fiercely cross­-partisan campaign is critical to our long-term success — winning national reform is impossible with only one-third of the country behind you.

We’ve found that the people fighting at the grassroots are sick of the gridlock in Washington, and much more willing to work across partisan lines than their members of Congress. While our supporters might not agree on everything, they’re united behind the fundamental belief that government — no matter how large or how small — must put the needs of the People first. Public policy decisions should be made based on merit, not lobbyists and campaign contributions. Our supporters are willing to put their partisan differences aside and work together to make that happen.

The effort behind the Tallahassee Anti­-Corruption Act is a perfect example of this principle in action. It was spearheaded by the chair of the Florida Tea Party Network, the former president of the Florida League of Women Voters, the chairman of Florida Common Cause, and a leader of Integrity Florida, an independent state ethics watchdog. This politically diverse coalition played an enormous role in the Tallahassee victory. As the editorial board of  the Tallahassee Democrat, the local paper of record, put it: “When you have representatives of the League of Women Voters, Common Cause, Integrity Florida and the state Tea Party Network all aligned against you, it might be time to reassess your position.”

Nell: You just won your first victory by passing an anti­-corruption code in the city of Tallahassee, FL. Let’s be idealistic for a second. What if you are able to log victories like Tallahassee’s in cities and states across the country. Is there a critical number of places before the movement becomes truly national? And then do you look at federal reforms? Or is the end goal every city and every state?

Josh: There is no “magic number” — Each state­-level win makes national reform more likely. Every statewide victory means more Congressional delegations from states with an Anti­-Corruption Act, and more public pressure on politicians to get on the right side of this issue or risk losing their seats.

While winning a federal Anti-­Corruption Act is a major goal, bringing reform to every city and state is just as important. This movement is bigger than any one law — it’s about fundamentally changing the political culture of the United States. It’s about demonstrating that Americans will not tolerate laws putting self-interest before the public good, and ensuring a government committed to serving the People at every level.

It’s not a question of idealism. This movement is real, and has no plans of slowing down. We’re planning to bring local Anti­-Corruption acts to 12 cities and 2 states in 2015 and 2016. We are already working with local law firms, political strategists and grassroots activists to make it happen.

If you’d like to be part of it, visit represent.us to learn more and join the campaign.

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What Can The iPhone Reveal About Philanthropy?

Recent studies of nonprofit donoSteve Jobsrs have found that the majority aren’t interested in impact. But what if that current reality isn’t also future reality but rather an opportunity? What if just as Apple created a market for smartphones where one didn’t exist, we could create a market for social change funding where one currently doesn’t exist?

As I mentioned in my 10 Great Reads list for January, data wonk Caroline Fiennes reviewed recent studies on donor behavior and found that donors don’t increase their donations when shown nonprofit performance data. And Caroline is not alone, others have also argued that donors just don’t care about performance.

This could be depressing because if donors aren’t interested in the effectiveness of a nonprofit they won’t shift their money to the nonprofits more effective at creating social change. In other words, we have no hope of solving social problems if we can’t channel money to those entities that are actually solving those problems.

Apple is probably the most obvious example of a market maker, creating consumer demand where there was none. They have continually created innovative products for swooning consumers who previously had no idea they needed those products. Before creating the first iPhone prototype in 2006 Steve Jobs didn’t survey consumers to ask if they wanted their phone to surf the web, send emails, and take pictures. A majority of consumers would probably have said no. Rather, Apple saw a need that consumers didn’t yet know they had (what marketers call a “latent need”) and built a huge consumer base from scratch.

They were market makers, as Fred Vogelstein described in the New York Times Magazine:

Apple’s innovations have set off an entire rethinking of how humans interact with machines. It’s not simply that we use our fingers now instead of a mouse. Smartphones, in particular, have become extensions of our brains…Its technology is changing the way we learn in school, the way doctors treat patients, the way we travel and explore. Entertainment and media are accessed and experienced in entirely new ways.

Jobs and his team created a completely different marketplace, set of cultural norms, and way of interacting with the world around us.

In the world of social change we need a completely different marketplace, set of cultural norms, and way of channeling money. So we need to create the market.

We need to show funders that the current flow of money to social change efforts is not sufficient or efficient. If we truly want solutions to our social challenges, we must create an effective financial market for those solutions.

I believe that funders can be inspired to change their behavior. They have a latent desire to see their dollars actually achieve something. They have been so used to the lowest common denominator of giving based solely on reciprocity or emotion, but that can change.

As Harvard Business Review blogger Umair Haque explains, Apple’s success comes from their ability to rise above the common denominator and create something people love and truly (though they may not yet know it) want:

Most companies…don’t care about what they make. They merely care about what they sell. And so they…offer the people they call consumers the lowest common denominator designed by focus-group led committees at the everyday low price in malls full of stores full of shelves full of…other lowest common denominators designed by committee at the everyday low price. Nobody ever loved anybody who was merely trying to sell them something. Especially not the lowest common denominator. People love people—and organizations—that make their lives better. Even when those things are as simple as phones.

The data and the focus groups may say that donors don’t want impact. Yet. So its up to us to create the market. It is up to us to get donors to love the impact that makes clients’ lives, donors’ lives, and ultimately our communities better. It’s up to us to create demand for funding real social change.

Photo Credit: Matthew Yohe

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