Lest you think we’ve made headway on overcoming the Overhead Myth (the false notion that nonprofits must keep their fundraising and administrative costs cripplingly low) you need only look as far as a recent Forbes article, “5 Nonprofit Leaders Share How to Keep Overhead Costs to a Minimum.” And this is perhaps even worse because it is nonprofit leaders themselves, not philanthropists or business leaders, telling nonprofit leaders that overhead is bad.
The Forbes Nonprofit Council made up of “top nonprofit execs [who] offer insights on nonprofit leadership & trends” compiled these 5 “tips” for keeping nonprofit overhead low. And the tips are as insidious as you might think. I know I should take the high road and just ignore this ridiculous article, but I simply can’t. In fact, it boggles my mind that overhead (to borrow a phrase from the brilliant John Oliver) is still a thing.
The Forbes article neglects to point out that the concept of “nonprofit overhead” has undergone a real transformation in the past few years. It assumes that “overhead” is still a dirty word, but anyone who has been paying attention knows that that is no longer a given.
There has been a movement among nonprofits and their philanthropic and government funders to evaluate nonprofits based on their results, rather than just their overhead rate. The federal government and some local governments have moved to increase the indirect costs paid to nonprofits. And just last month a new Bridgespan study analyzed the indirect costs of 20 different nonprofit organizations and found, not surprisingly, that overhead rates vary greatly depending on the business model and industry of a given organization (just as it does in the for-profit sector).
So for the Forbes article to simply encourage nonprofits to keep their overhead as low as possible ignores the changes that have occurred in the sector and the very real fact that different organizations, business models and issue areas might require very different administrative and fundraising costs.
But beyond those huge oversights, the Forbes article does a further disservice to the nonprofit sector by providing 5 ridiculous and crippling “tips” for keeping overhead low. Here’s why each one is so wrong:
- “Look for Low-Cost IT Options”
To the contrary, I would say that many nonprofits don’t spend enough on IT. So often nonprofit leaders are using outdated technology and systems, or worse, not gathering data at all because they simply don’t have the funds. Nonprofits need to spend more, not less, on IT.
- “Don’t Overwork Your Team”
Seriously? Isn’t overwork simply a given in the nonprofit sector? Because nonprofit leaders often don’t have the funds to hire enough staff, they ask the staff they do have to wear too many hats. The solution is not to tell nonprofit leaders to stop overworking their team. Rather nonprofit leaders must raise the funds necessary to fully staff the work. And that means we need more money in the sector for capacity building.
- “Reward Innovation”
The Forbes article advises nonprofit leaders to “create a culture that rewards innovation and encourages employees to be scrappy.” Certainly on this point nonprofits already win in spades — nonprofits are nothing if not scrappy. But I’m not sure scrappiness and innovation go hand in hand. It’s hard to be innovative when you are worried the doors may close tomorrow. Innovation comes with more capacity capital — once nonprofits have the tools, systems and people they need, innovation can follow.
- “Maintain a Clear Business Methodology”
And here’s where Forbes falls back on the old stand by — nonprofits need to act more like businesses. But what clear business methodology advises undercutting the sales function (fundraising in the nonprofit sector), systems, and staffing? Why do we choose only some of the ways we want nonprofits to “be like businesses,” but ignore others? No successful business leader will tell you that is a smart strategy.
- “Invest in Community Leaders”
The Forbes “experts” encourage nonprofit leaders to hire more volunteers, students and interns in order to save on staff costs. NOOOOOO! If we are truly going to solve the challenges we face, we need more experts, not fewer. While volunteers and students are great for rote tasks, that only gets you so far. Nonprofits need expert fundraisers, brilliant program people, IT geniuses and more. We don’t encourage Silicon Valley to hire more volunteers and interns to create the next tech solution, so why tell nonprofit leaders to hire more volunteers and interns to create the next social solution?
Can we please, please, please move beyond this broken and damaging view of nonprofits? We would never ask the makers of the next shiny widget to cut their sales, staff and systems to the bone. So let’s not demand that of those working to save the world.
Instead, let’s have a smarter conversation about how social change leaders must ask for (and receive!) the tools they really need to make our world a better place.
Photo Credit: Adrian
May offered some interesting insights into the world of social change. From a plea by nonprofit infrastructure groups for more funding, to some criticisms of philanthropy’s unwillingness to invest in rural economies or provide a realistic runway to nonprofits, to digital’s impact on journalism, to the evolving sharing economy, to a call for more nonprofit board resignations, to a way to break the nonprofit starvation cycle, there was a lot to read.
Below are my picks of the 10 best reads in the world of social change in May. But you can always follow me on Twitter (@nedgington) for a longer list.
And if you are interested in past months’ 10 Great Reads lists, go here.
- Perhaps the biggest news of the month was the letter written by 22 groups, which provide support to the entire sector (like the National Council of Nonprofits, the Nonprofit Finance Fund, and GuideStar), asking foundations to provide more funding for the nonprofit ecosystem. GuideStar CEO Jacob Harold (here) and National Council of Nonprofits CEO Tim Delaney (here and here) explain why this issue is so important. But Pablo Eisenberg disagrees.
- National Committee for Responsive Philanthropy Executive Director Aaron Dorfman takes philanthropy to task for not investing enough in rural communities, where change is needed most. As he puts it: “The philanthropic sector continues to neglect rural communities. A changing national economy, entrenched racial inequity and foundations’ reliance on a strict interpretation of strategic philanthropy has meant philanthropic resources for rural communities are few and far between, just when the opportunities for change are most urgent. This has to change if we want to see progress on the issues we all care about.”
- Piling on to the criticism of philanthropy, Laurie Michaels and Maya Winkelstein from Open Road Alliance, encourage their fellow philanthropists to help nonprofits deal with risk and disruption. As they put it: “Most grant budgets are designed with zero cushion even when the nonprofit is working in tough conditions that can turn the simplest obstacle into an unmanageable issue…any unexpected but inevitable change or deviation in the budget is potentially catastrophic. The nonprofit’s inability to fluidly adapt the budget to manage these roadblocks, however minor, can jeopardize even the largest of undertakings…Risks alone are threatening, but when the concept of risk goes unacknowledged, undiscussed, and unaddressed, those risks are more likely to become realities. All this adds up to lower impact, turning manageable events into liabilities.”
- Maybe female philanthropists can turn the tide. The Lilly Family School of Philanthropy released some fascinating new research about how women are changing philanthropy. And Megan O’Neil, writing in The Chronicle of Philanthropy, explains how nonprofits must adapt in order to tap into this growing philanthropic force.
- Journalism is changing rapidly, due in part to the growth of digital. Research shows that different social media platforms connect people to news in different ways, and long-form journalism is seeing a resurgence thanks to mobile.
- And it’s not just journalism that digital is changing. The Nonprofit Tech for Good blog offers 16 Must-Know Stats About Online Fundraising and Social Media and 5 Ways the Internet of Things Will Transform Fundraising.
- The growth of the “sharing economy”, where consumers rent or borrow goods and services rather than buy them, has huge implications for the social change sector. Pew Research outlines 8 key findings about how Americans relate to the sharing economy and interviews NYU professor Arun Sundararajan about how the sharing economy is evolving.
- Nonprofit Law blogger Gene Takagi pulls no punches in offering 12 Reasons Why You Should Gracefully Resign from a Nonprofit Board. Yes, yes, yes, to more accountability, honest conversations, and clear expectations on nonprofit boards.
- Writing in the Stanford Social Innovation Review, Jeri Eckhart-Queenan, Michael Etzel, and Sridhar Prasad discuss the findings of a new Bridgespan Group study that analyzed the indirect costs of 20 different nonprofit organizations. What they found, not surprisingly, is that indirect rates vary greatly depending on the business model and industry of a given organization (just as it does in the for-profit sector). The authors argue that if more nonprofits understand and report their true costs, nonprofits could break the starvation cycle: “It’s clear that philanthropy’s prevailing 15 percent indirect cost reimbursement policy does not take into account the wide variation in costs from segment to segment. Doing so would have far-reaching effects on philanthropy and grantees. If nonprofits committed to understanding their true cost of operations and funders shifted to paying grantees what it takes to get the job done, the starvation cycle would end.”
- A nonprofit dashboard is a good way to monitor and report on a nonprofit’s effectiveness and sustainability over time. Hilda Polanco, CEO of FMA, explains how to create a great one.
Photo Credit: Omarfaruquepro
As much as we might like to deny it, nonprofits exist in a market economy, which means that nonprofits, like everything else, must compete for customers and resources. Therefore it is critical that you understand where your nonprofit fits in the market.
While a business has one customer, a nonprofit has at least two distinct customer groups:
- Those who benefit from a nonprofit’s work (clients), and
- Those who fund that work (donors, government contractors, etc).
So it is absolutely critical that nonprofit leaders understand what unique value their work brings to these customers. This can be done through a Marketplace Map, which is one of the first exercises (along with a Theory of Change) that I help nonprofit leaders create during a strategic planning process.
A nonprofit organization is best positioned to create social change in a sustainable way when their core competencies (what the organization does better than anyone else) intersects with a community need (or set of social problems) apart from their competitors or collaborators, like this:
But don’t get me wrong. I am not saying that a nonprofit shouldn’t collaborate.
On the contrary, nonprofit leaders must forge strategic alliances that help move the social change they envision forward. However, when they create those alliances, they must be crystal clear about what their organization brings to the table, versus what a potential ally brings to the table. Thus, a marketplace mapping exercise is absolutely critical to charting a way forward.
In order to create their marketplace map, a nonprofit’s board and staff must answer these three key questions:
- Core Competencies: What superior assets (expertise, relationships, etc.) do we possess as an organization that are not easily replicable?
- Community Needs: What community needs/social problems are we attempting to address?
- Competitors/Collaborators: What other entities are working on some/all of those same problems?
The social change sector has become increasingly competitive in recent years. Now more than ever, nonprofits need to understand this external marketplace of competitors/collaborators against their own core competencies in order to understand the unique value that their nonprofit can contribute.
From this marketplace mapping exercise, some key strategic questions will emerge for the nonprofit, such as:
- Where do our core competencies and activities end, and where do others’ begin?
- Is our nonprofit better positioned than other entities to conduct all of the activities (from our Theory of Change) that we currently do? Should some activities be left to those who do it better?
- Are there core competencies that we must develop in order to better address the community needs we’ve identified?
- Are there collaborators/competitors that we should be more strategic about aligning with?
Creating a Marketplace Map, much like creating a Theory of Change, is an incredibly useful exercise that gets your board and staff thinking in bigger, more strategic ways about your work. And those more strategic conversations can help lead to a more effective and sustainable path forward.
If you want to learn more about how I work with clients to develop their strategic plan, download the Strategic Plan benefit sheet.
I’m a little late on my 10 great reads list this month because the GEO conference kept me busy, but there was lots going on in April. From the most pressing issues facing foundation leaders, to what history can tell us about new philanthropy and combatting xenophobia, to how nonprofits create economic value, to Millennials and social change, to state lawmakers attacking nonprofits, it was not a slow month.
Below are my 10 favorite reads from the month of April.
- If you read only one thing on this list, let it be Ruth McCambridge’s fascinating interview with media theorist Douglas Rushkoff. He argues that a nonprofit (or benefit corporation) business model is far better at creating value than a corporate model that operates under a “scorched earth policy.” He argues that corporations transfer value only to their shareholders, instead of the economy as a whole. As he puts it:
“Unlike the for-profit sector, the nonprofit company can’t sell itself, and it doesn’t have shares that go up in value…the way you make money is not by making your share price more valuable and then selling those to other people…the investment that you put in the company stays in the company. You can’t extract that when you leave. So, it’s much more like a family business, and if you look at the data, family businesses do better than shareholder-owned businesses in pretty much every single metric, and they last a whole lot longer. You’re building a company not because you want to take value out of it and then use that money to bequeath an inheritance to your grandchildren, but rather you’re building a company that you hope will still be around when your grandchildren need a job, to circulate wealth when you die. That’s why I’m trying to convince Internet startups to be benefit corporations, multipurpose corporations, or best of all, nonprofits.”
- And if you only have time to read two things on this list, let the second thing be Phil Buchanan’s essay on the five most pressing issues facing foundation leaders, “Big Issues, Many Questions.” A thought-provoking read.
- Pew Research provides a cool interactive graphic of the ebbs and flows of political polarization over the last 20+ years.
- While we are talking about change over time, I have always thought there are great parallels to be drawn between the philanthropists born of today’s digital age and the Gilded Age philanthropists. Nellie Bowles writing in The Guardian seems to agree in her piece about the “Digital Gilded Age.”
- And speaking of the history of philanthropy, Alfred Perkins, writing on the HistPhil blog, sees parallels between our current xenophobic political environment and the anti-Japanese sentiment in World War Two. But back then Rockefeller Foundation philanthropist Edwin Embree fought it. And perhaps there is a lesson there for philanthropy today: “By moving boldly beyond the customary boundaries of organized philanthropy, Embree was able to challenge deeply-held prejudices, demand justice for a vulnerable minority, and extend the impact of the monies he disbursed. This pioneer of his profession would not have voiced the idea, but implicit in his words and actions is the notion that foundation executives might on occasion serve as the nation’s conscience. In these less stringent times, his example might provide useful lessons for his contemporary successors—to the benefit of the philanthropic enterprise, and the nation as a whole.”
- So what will the future of social change be? All eyes are on Millennials, from how they turn out to vote, to how they donate, to what they think of capitalism, to how they find housing.
- A recent conference focusing on “maintainers” rather than the overly popular “innovators” aimed to uncover how critical the role of those maintaining the world in which we live are. As one of the conference organizers, Lee Vinsel (assistant professor of science and technology at the Stevens Institute of Technology) put it, “The vast majority of technologies that surround us and underpin our lives are not innovations. And the vast majority of labor in our culture is not focused on introducing or adopting new things, but on keeping things going.”
- Nonprofits have been under fire lately by state lawmakers who are trying to make it even harder for nonprofits to do their work. Tim Delaney from the National Council of Nonprofits provides an overview on what’s happening and what we can do about it. And Erin Bradrick delves into a proposed California bill that didn’t make it out of committee but sets a dangerous precedent on legislating nonprofit overhead rate disclosure in fundraising.
- Particularly during an election cycle, the struggle of the modern news media becomes more evident. The Knight Foundation released a troubling report that the news media has grown less able to defend their First Amendment rights in court. And French economist Julia Cage argues in her new book that the news media should embrace a nonprofit business model in order to reflect better its social role of bolstering our democracy.
- Hanh Le from Exponent Philanthropy and Rusty Stahl from Talent Philanthropy make a very convincing case about why funders should invest in nonprofit talent. Let’s hope this helps turn the tide.
Photo Credit: Stepan Lianozyan via Wikimedia Commons
Note: As I mentioned last week, I am at the Grantmakers for Effective Organizations conference this week curating a group of bloggers. Next up is Trista Harris, President of the Minnesota Council on Foundations. Her guest post is below. And don’t forget you can also follow the conference from afar on Twitter #2016GEO.
Day two of the 2016 GEO National Conference was all about bringing equity to the forefront in Grantmaking. Two of the morning short talks really stood out for me:
- Isaiah Oliver, Vice President of Community Impact at the Community Foundation of Greater Flint, on the water crisis, and
- Alicia Garza, co-founder of #BlackLivesMatter and special projects director for the National Domestic Workers Alliance, about turning moments into movements.
Here’s some of what they covered.
Isaiah Oliver told a heartbreaking story about how the Flint water crisis is impacting his family directly. He said “I trusted those that said the water in Flint was safe, so I gave it to my babies. My little girls should not have to analyze public water. What if this was your child?” The EPA has said that 15 parts per billion is a safe level of lead in the water; two weeks ago there were houses in Flint that had 11,040 parts per billion. Isaiah said that “if a house is on fire, you need to get the people out and then worry about blame later.” We have not yet gotten all of the people out of the fire.
Alicia Garza said “Hashtags don’t start or sustain movements, people do.” Philanthropy is not prepared to support fast moving movements. Our structures and processes have created a situation where celebrities have given more to #BlackLivesMatter than philanthropy has. She made two critical suggestions to address this issue:
- Philanthropy should get money to change agents while change is happening. Fund movements to fail fast and learn quickly from those failures to innovate their strategies.
- Structural racism exists in philanthropy, and grantmakers should develop strategies to get out of the way of social movements.
Then there was a panel on Equity as an Effectiveness Imperative.
Michael McAfee, of Promise Neighborhoods Institute at PolicyLink, when given the chance for closing remarks at the Equity as an Effective Imperative plenary luncheon, said “I love all of you.” That may strike those not in attendance at the 2016 GEO conference as an odd thing for a speaker to declare to a room of 900 funders, grantmakers and organizational leaders, but in context it perfectly summed up the message of the collective speakers. For equity to truly be a part of the work in philanthropy there must be equal parts discomfort and love throughout all conversations and collaborations.
In addition to McAfee, the panel included: Minnesota State House Representative Peggy Flanagan, CEO of Meyer Memorial Trust Doug Stamm, and moderator Reverend Starsky Wilson of the Deaconess Foundation. Each of the four speakers brought a vulnerability to how they shared their personal and professional experiences with racial inequities in the philanthropic sector. And this created an open and connected space in the ballroom.
Wilson made it clear from his opening remarks that the plenary would focus on racial inequities and the uncomfortable work grantmakers face if meaningful change is to be made. Flanagan talked about her work as Executive Director at the Children’s Defense Fund-Minnesota and the impact there in creating people of color-centered and American Indian-centered spaces to talk about early childhood education. Stamm talked frankly about the heavy burden carried by the people of color at Meyer Memorial Trust as they’ve worked to make racial inequalities more than just a side conversation in their work but actually take action to make internal and external changes. And McAfee shared how sometimes talk about “equity” can be a way to avoid dealing with subtle or institutional racism.
There were powerful questions from attendees about the importance of what language is used and how it is used and how to decide when to educate a colleague about race and when to delegate that education to books or professional development. McAfee, Flanagan and Wilson shared stories of often feeling subtly or overtly ignored, othered or discounted while Stamm admitted his slow learning curve as a white person who hasn’t been forced to be aware of institutional racism.
Numerous attendees expressed on social media that this conversation resonated in ways few other conference sessions ever have. You can see the emotional and engaged responses to a moving and important conversation at #2016GEO.
March was a whirlwind in the world of social change. From successful nonprofit advocacy efforts, to new ways to measure fundraising effectiveness, to finding inspiration in small American cities, to a disconnect between civic engagement funders and activists, to new technology to serve the homeless, and a lot more in between, there was much to read.
Below are the top 10 things that caught my eye in the world of social change in March. If you want to see the longer list, follow me on Twitter @nedgington. And if you want to see past months’ 10 Great Reads go here.
- SeaChange Capital Partners put out a stunning report about the depressing state of financial risk management in health and human services nonprofits in New York, but their insights could really be applied sector-wide. As the report cautions: “Trustees must strive to maximize the good that their organization does while managing its risks. Balancing these can be challenging because of the passion they feel for the organization and its mission. Nonprofits lack the indicators of organizational health that reach the directors of for-profit businesses, such as stock prices or credit spreads…In this context, nonprofit trustees in leadership positions must ensure that well thought through risk management processes are in place. In a challenging operating environment, the status quo is no longer acceptable.”
- Perhaps help is on the way. A fascinating conversation happened between the head of the Nonprofit Finance Fund, Antony Bugg-Levine and Fred Ali, head of the Weingart Foundation and champion of the movement to cover full costs and give nonprofits unrestricted flexible funding. Ali is a huge proponent of investing in nonprofit capacity, as he describes: “The incessant [funder] focus on restricted programmatic grants has come at a huge cost to our sector. When we were considering a shift to unrestricted grants, we took a look back and found that many times the organizations we were supporting were not producing the outcomes we were looking for because they didn’t have the ability to invest in the kind of infrastructure that is necessary to produce those outcomes. So when I hear foundations object to our approach, I have to ask, ‘What are you trying to accomplish? Does your grantmaking approach help or hinder the development of capacity and sustainability?’ It is pretty clear that we have a lot of nonprofit organizations that are doing incredible work, being asked to do even more work, and they are not getting the kinds of support they need to that work effectively.” Yep.
- Pew Research is really knocking it out of the park lately. Every day they come out with fascinating data slices that are relevant and topical. Like their infographic on the 10 demographic trends that are shaping the U.S. and the world, which blew my mind. And if you want to dig into data just on the nonprofit sector, check out this in-depth report from The Bureau of Labor Statistics, which The Nonprofit Quarterly calls “required reading for leaders and board members of nonprofits and philanthropy.”
- On Monday, the governors of both California and New York signed legislation raising the minimum wage in their states to $15 per hour. Apparently we have the advocacy efforts of nonprofits to thank for this social change.
- But economics professor Mark Hendrickson doesn’t see a lot of value in the nonprofit sector. If you feel like getting justifiably incensed, take a look at his eye-popping read in Forbes where he is responding to what he calls the “turf war” between philanthropy and capitalism. Hendrickson provides many stunning quotes about the nonprofit sector, including this whopper: “Many non-profits do good work (albeit without the efficiencies imposed by the profit-loss calculus). However, they have no moral standing to criticize or condemn those who create the wealth that the non-profits spend. Non-profits essentially are professional mendicants trying to do good with other people’s money. It’s time for the non-profits to abandon their petty turf war and to muster enough grace at least to keep silent if they can’t bring themselves to express gratitude for the dominant, indispensable role of the profit-makers in advancing human welfare.” Wow.
- So now that you’re mad, let writer James Fallows inspire you. He and his wife Deb have been on a three-year journey across the country visiting small cities to understand what contributes to their cultural and economic resilience. What they found is that despite political dysfunction at the national level, there is some very inspiring progress happening at the local level: from urban renewal, to bipartisan compromise, to educational reform, to state-of-the-art job training and much more. As Phillip Zelikow, a professor at the University of Virginia and quoted in Fallows piece put it: “In scores of ways, Americans are figuring out how to take advantage of the opportunities of this era, often through bypassing or ignoring the dismal national conversation. There are a lot of more positive narratives out there—but they’re lonely, and disconnected. It would make a difference to join them together, as a chorus that has a melody.”
- And speaking of innovation, some nonprofits have developed apps to better serve the homeless, to varying degrees of success.
- Writing about civic engagement in The Nonprofit Quarterly Austin Belali bemoans the disconnect between those who are leading a new surge in civic movements (like Black Lives Matter) and the philanthropists funding civic engagement efforts, noting: “While the leaders of what could be described as a twenty-first-century movement for inclusive democracy are largely women and people of color, civic engagement philanthropy and the organizational leadership it supports is stubbornly the opposite.” And looking at a specific kind of civic engagement (voter turnout among young people), Abby Kiesa and Peter Levine might agree when they argue in the Stanford Social Innovation Review: “We must ask whether society supports youth engagement, and, if it does, how that support can be made equal for all youth, regardless of education, race, and income. We believe that encouraging youth to engage and to contribute their skills and values can help improve the political culture, but major institutions—educational, governmental, political, and civic—must actually want that to happen.”
- Adding to what has been a scarce (but hopefully growing) body of research on fundraising effectiveness, The Bridgespan Group released a new study about calculating the fundraising effectiveness of each affiliate within a national nonprofit network (like Big Brothers Big Sisters or the YMCA). They created a calculation they call “share of wallet,” which they define as “current fundraising performance compared to fundraising potential as gauged by the pool of donor dollars you draw from.” This fairly simple calculation of how much each site raises vs. what is possible to be raised can help a national nonprofit uncover which sites are more successful and why, and then hopefully help lower performing sites raise more.
- And finally, social media maven Beth Kanter urges us all to take a digital detox day. Sounds fantastic…how about a week instead?
Photo Credit: David McSpadden
February focused (at least in my mind) on innovations in philanthropy. A new growth capital fund for nonprofits, radical philanthropists, trends in charitable giving, and philanthropy’s role in creating the future. Add to that a bold move by a nonprofit to wrest a lucrative city recycling contract from a for-profit company, research on Millennials’ hopes for the future, and a call for presidential candidates to take a lesson from history. It was a great month.
Below are my picks of the 10 best reads in the world of nonprofits, philanthropy and social change for the month of February. And if you want a longer list of what catches my eye, follow me on Twitter @nedgington.
You can also see past months’ lists of 10 Great reads here.
- There was a really exciting development in philanthropic support of nonprofit capacity in February. Ten donors led by the Edna McConnell Clark Foundation joined together to form Blue Meridian Partners, which will award $1 billion worth of unrestricted, performance-based grants, via 5 to 10-year investments of up to $200 million per nonprofit. According to Edna McConnell Clark Foundation president Nancy Roob, this venture is a new way to invest in high-performing nonprofits, because as she puts it: “Without large, long-term investments of growth capital for organizations with proven results, we’ll continue to salve but not solve our big social challenges.” Yep.
- And speaking of innovations in philanthropy, Inside Philanthropy provides a really interesting profile of philanthropist Farhad Ebrahimi and his Chorus Foundation, which although a relatively small foundation is taking an unusual approach to environmental giving by using a spend-down plan, providing long-term general support grants, and practicing mission investing.
- In analyzing Blackbaud’s 2015 Charitable Giving Report and comparing it to other available data both in the US and Canada, Amy Butcher of The Nonprofit Quarterly finds some interesting insights about how philanthropy is evolving.
- But perhaps it isn’t evolving quickly enough. Minnesota Council on Foundations President Trista Harris recently attended the Abundance 360 Summit about the technology of the future and was disappointed at the lack of a philanthropy presence. As she puts it, “Change in the world and our communities is happening at a breathtaking rate, driven by access to infinite information and exponential increases in computer processing speeds. This accelerating rate of change makes the challenging work of doing good even more difficult. Foundations are trying to make the world a better place, but we are often using yesterday’s information to do so. What if we could predict the future and prepare for the realities that will soon impact our communities? I believe it is our responsibility, as philanthropic leaders, to learn the skills necessary to understand and create the future.”
- Pew Research does an excellent job of unearthing data that relates to the issues of the day. In February I was especially interested in their report that while Millennials are less confident than Gen X or Baby Boomers about America’s future, so were their parents and grandparents when they were young.
- And while we are on the topic of history…Every once in awhile New York Times columnist David Brooks really strikes a chord. In February he used his column to pen a letter to several of the remaining presidential candidates encouraging them to use a “Roosevelt Approach,” as Brooks describes: “Many Americans feel like they are the victims of a slow-moving natural disaster…it’s a natural disaster caused by structural forces — globalization, technological change, the dissolution of the family, racism. A great nation doesn’t divide in times of natural disaster. It doesn’t choose leaders who angrily tear it apart. Instead, it chooses leaders like Franklin Roosevelt and Dwight Eisenhower…they were…able to set an emotional tone that brought people together and changed the nature of Americans’ relationships with one another. During their presidencies, the bonds of solidarity grew stronger and the country more formidable. They were able to cultivate a deep sense of unity, responsibility and sacrifice.”
- Writing in the Stanford Social Innovation Review, Daniela Papi-Thornton, deputy director of the Skoll Centre for Social Entrepreneurship, is quite critical of what she calls, “Heropreneurship,” when social entrepreneurs who have little experience or training are generously funded to solve complex social problems. According to her: “Unfortunately, all too often, the people who get the funding to try their hand at solving global challenges haven’t lived those problems themselves….We’re wasting limited resources on shallow solutions to complex problems, and telling our students it’s OK to go out and use someone else’s time and backyard as a learning ground, without first requiring that they earn the right to take leadership on solving a problem they don’t yet understand.”
- Nonprofit Tech for Good offers a nice list of 36 apps and online tools for nonprofits.
- In an interesting decision, the Minneapolis city council voted to award the city’s 5-year recycling contract to a nonprofit, instead of the for-profit that manages recycling for most of the country. Writing in The Nonprofit Quarterly, James Araci sees an exciting trend: “It’s a smart move for nonprofits to shift perceptions of America’s waste from a commodity to be sold to countries like China to an engine of local job creation and environmental benefits.”
- And finally, head of the Nonprofits Assistance Fund, Kate Barr takes aim at the nonprofit overhead myth by encouraging nonprofit leaders to change their own language and thinking: “If we in the nonprofit sector want to bust the overhead myth and bring attention to the things that really matter, then it’s our responsibility to take the lead by communicating differently and better. In order to take that lead, don’t wait for the question to come in and then argue why the [overhead] ratio isn’t important or meaningful. We have to replace it.” Sing it, Kate!
Photo Credit: jwyg, cropped version of “Work with schools : after a book talk, showing boys gathered…” from New York Public Library
At Monitor Institute, a part of Deloitte Consulting, Anna leads the practice on how to drive large-scale social change through galvanizing networks around a shared agenda. She has led aligned action efforts for organizations such as New Profit, Skoll Foundation and Venture Philanthropy Partners. Anna is the author of GATHER: The Art and Science of Effective Convening; ENGAGE: How Funders Can Support and Leverage Networks for Social Impact; and most recently, “Wicked Opportunities” in Business Ecosystems Come of Age.
You can read interviews with other social change leaders here.
Nell: Is the idea of a network entrepreneur new in the world of social change? Or how do you think the use of networks is different now than it has been in the past?
Anna: The idea of an individual who works, often tirelessly, to mobilize diverse stakeholders to tackle a tough problem by developing a coordinated plan of attack is not new by any means. Funders and practitioners have been galvanizing networks to address large scale challenges for decades. But the term “network entrepreneur” is new. I heard it recently from two practitioners, David Sawyer and David Ehrlichman from Converge, who are working with network leaders in California.
Over the years we’ve used several terms to describe this type of person: network weaver, network CEO, system leader, tri-sector athlete, Chief Resilience Officer, ecosystem integrator, to name a few. What is changing, though, is the acceptance of why developing the capacity to lead and engage in problem solving through networks is important—as well as an appreciation for what it takes to do so. Increasingly, we’re seeing a shift from the organization as the primary unit of change to the network as a viable means of achieving social impact goals.
Nell: Why do you think nonprofit leaders should embrace the idea of a network entrepreneur? What makes this approach so attractive to social change efforts?
Anna: It’s not just nonprofit leaders who should embrace the idea of using networks to drive systemic change. The tough problems we face as a society have no consideration for sector or issue boundaries—and can’t be solved by leaders from any one sector. Business and government leaders have just as important a role to play in cross-sector social problem solving. And for companies, working through networks is becoming a powerful way to integrate social impact into their core business strategy rather than isolate it within a corporate social responsibility initiative. This is where a lot of exciting activity is happening globally.
We’ve identified five types of networks that create that intersection between social impact and business value—and in which companies are playing critical roles. There are those networks which can directly benefit a company’s core business and are designed for addressing strategic goals such as stewarding natural resources, enabling market-based solutions and raising industry standards. Then there are networks that tend to more indirectly benefit a company’s core business; and these focus on aligning solutions within local communities and mobilizing action around large-scale solutions. We are seeing bold cross-sector experiments in many arenas–where social impact networks are successfully engaging the private sector to tackle a range of challenges while also meeting specific business needs, such as: effectively stewarding the forests of the Santa Cruz Mountains in California; redesigning the global seafood supply chain to preserve fisheries; surfacing new market-based solutions for building a healthy and sustainable food system worldwide; improving access to new and underused vaccines for children living in the world’s poorest countries; and enabling communities to create local education ecosystems to support children and youth from cradle to career.
I don’t want to put an unrealistic sheen on the power of networks to solve all problems. Working in this way is one of many important tools in our collective problem-solving toolkit. What networks do, however, is allow us to pursue solutions that would be harder to attain in other ways. A network approach aligns the actions of a diverse set of stakeholders to tackle a larger piece of a problem than by working in isolation; diversifies risk and spreads bets across many experiments; enables innovation by building a platform where different voices can come to the table to shape new solutions; and ultimately, helps build a resilient problem-solving ecosystem where a dense web of relationships provides the resilience necessary to adapt to new challenges and opportunities as they arise. These qualities are harder to get through one-to-one partnerships or from the efforts of a single organization. A network builds a platform that can launch a portfolio of interventions and simultaneously pull many levers for change. That’s what makes them attractive for social change efforts.
Nell: Networks are often organic and can become ineffective if they are overtaken by a single person or entity, yet they also require leadership to be successful. How does a network balance the need for leadership with the need for organic growth?
Anna: Walking the right “leadership line” is certainly critical in a network context; but that’s not to say that networks don’t need focused and intentional leadership. Network leadership requires a different mindset than operating in a traditional organization. It’s more loosely controlled and emergent than top-down and planned. Decision making is shared rather than concentrated in one person. Insights come from the collective rather than from individual “experts.” Power and commitment come from trust among many not from mandates from the C-suite.
In this way, leadership is just one of the many attributes to factor into a network’s design. Through our own work with networks, we’ve identified eight particularly common ways that they can vary to suit different circumstances—and enable or hinder growth. Besides the important leadership attribute, network entrepreneurs need to consider others such as a network’s purpose, alignment, governance, sector, orientation, size and geography.
Our Axes of Collaboration (to the left) is a useful tool for any network entrepreneur as they think about the foundational DNA of a network—and how to design one to best match the type of problem it’s meant to tackle.
For instance, if you’re a network like REAMP, now with over 165 participating organizations focused on the ambitious goal of reducing carbon emissions 80% by 2050 across the Midwest, you won’t want to design a network that “lives” more on the left side of these axes: one with distributed leadership, informal governance, that’s more learning than action oriented, and has minimal alignment. You’ll never hit that goal with that kind of design. Leadership is a critical component of any network; but so are the other factors that will either help support or inhibit a network’s growth. Considering all these dimensions—and then designing appropriately—is essential.
Nell: When you look at some of the social movements active today — like Black Lives Matter and the protests on college campuses — how does your research on networks help inform your understanding of whether or how successful you think those efforts will be?
Anna: I won’t try to predict the future of these movements. But through our work helping design and launch networks, we know that we need to apply a different frame to evaluate a network’s success. We’ve been influenced by the work of Peter Plastrik and Madeline Taylor who are pushing the field’s thinking around how we measure the impact of a network. For a network, it’s important to understand—and to be able to measure—not just the effects, what a network achieves in terms of outcomes, but also to measure its operations, its “internal health” and how it runs.
We segment network effects into three areas:
- Beneficiary effects (the outcomes and impacts on the people a group aims to serve),
- Idea dissemination (the spread and adoption of language, concepts or practices a network supports) and
- Field building (changes we’ve promoted in the development of the fields in which we work).
We then segment network operations into its structure and health and measure things such as the network’s membership, connectivity, activities, resources, infrastructure and value proposition. Many years ago we developed a diagnostic tool to evaluate a network’s effectiveness. Many of the elements to consider may be highly relevant to those working more directly with movements.
Ultimately, a network’s—or movement’s—success depends on a variety of factors. And getting smart about how to track them in order to refine, recalibrate or redirect the network’s strategy is what matters. Unfortunately, there’s not one solitary variable to evaluate the multi-dimensional nature of a network that’s built to tackle deeply systemic and complex challenges. I wish it were that simple, but it’s not.
Photo Credit: Monitor Institute