A Boot Camp for Young Social Entrepreneurs

Tomorrow, Saturday, March 13th Do Something, an organization that gets teenagers involved in social change, is holding an interactive webcast boot camp for young budding social entrepreneurs and you can watch it here.

The Social Action Boot Camps bring together young community leaders, activists and social entrepreneurs for a day of networking and training dedicated to giving each attendee the tools to grow and sustain their community action ideas, projects and organizations.

Here is the Streaming Schedule:

Do Something Boot Camp Interactive Webcast
From New Orleans
Saturday, March 13th from 9am- 5:30pm

9:00-9:30: Keynote from Do Something Award Winner Divine Bradley
9:40-10:35: Corporate Sponsors: How to pitch your project and manage donor relationships
10:45-11:40: Building a Website
12:50-1:20: Do Something Youth Panel
1:30-2:25: Partnerships
2:35-3:30: Public Speaking
3:40-4:30: Interviews with young social leaders

You can come back here tomorrow to watch the webcast and ask questions of guests and speakers via Twitter (Tweet your remarks to @justgOOdtv with #dsbootcamp) or Facebook chat.

To find out more go to the Do Something Training site.

Tags: Do Something, Social Action Boot Camp, social entrepreneurs

The Change.org Social Entrepreneurship Blog

I am delighted to announce that I’ve been asked by the Change.org Social Entrepreneurship blog to become a regular contributor.  It’s a real honor to be part of this phenomenal blog, so I hope that you will check it out and join the conversation.

I will still write for the Social Velocity blog as often as I have been, but if you’re interested in my additional posts, check them out there.  My first post “The Danger of Abandoning the Nonprofit Sector” is up today, and here’s an excerpt:

With all the excitement and energy around social entrepreneurship, there’s a tendency to dismiss the sector that was working on social impact long before it was cool: the nonprofit world.  These days, nonprofits get far less airtime in the social innovation movement than their for-profit, social entrepreneur counterparts…Again and again, I’ve heard that innovation will never become part of the nonprofit system — that nonprofits are too set in their ways. Or that the sector is too broken to emerge anew. That attitude, though, is unacceptable. There’s great danger in dismissing the sector. Sure, it’s inefficient, dysfunctional and broken. Yet it has tremendous potential for innovation. Indeed, without innovation in the nonprofit sector, the broader movement to solve social problems is doomed…

Tags: Change.org Social Entrepreneurship blog, nonprofit, Social Entrepreneurship

A Watershed for the Social Capital Market?

One of the sessions of the RISE Social Entrepreneurship track was a panel of investors who fund social entrepreneurs (both nonprofit and for-profit).  One of the panelists was Scott Collier, Managing Director of Triton Ventures.  Scott has been a venture capital investor since 1991, serves on the board of the Entrepreneurs Foundation of Central Texas, and is working to engage Austin’s funding community in social innovation.  In the RISE panel Scott was on, a conversation began around mission-related investing, the missed opportunity currently facing foundations, and how a new move by the Gates Foundation may be opening up a whole new pool of funds to social entrepreneurs.  I asked him to write a post on this. It follows here.

I was recently fortunate to be on a RISE panel with a great mix of entrepreneurs and venture investors turned philanthropists, private foundation founders and social investors, all talking about investment in social enterprises.  The discussion emphasized the grant-making functions of the foundations represented on the panel and the exciting ventures that these grants were supporting. However, as often happens, there was no discussion about the potential for social impact investing by the investment functions of these organizations if they were to allocate a portion of their investment capital to activities that could produce both a financial return and a social impact.

I mentioned that this seemed to be a missed opportunity since the investment function of U.S. foundations manages about $550 billion whereas the grant-making function manages a much smaller amount: about $45 billion a year.  This would seem to imply that small program-related or mission-related investment allocations out of the $550 billion under management could represent much greater impact investing potential than would similar allocations of grant funds.  I also mentioned a cautionary tale as revealed in an LA Times article in 2007, where it was pointed out that the Gates Foundation, the world’s largest private foundation, was investing for a financial return in companies whose business practices were causing harm to individuals that were at the same time receiving benefits from NGOs supported by Gates Foundation grant funding.  Given that investment dollars comprise such a much larger sum, such returns-only investment practices could be undermining the value of grants, resulting in questionable net positive impact if viewed holistically.

What I failed to add to this conundrum is that the Gates Foundation has now recognized the opportunity to be a thought leader in making social enterprise investments out of their investment capital.  Below is an excerpt from the Gates Foundation website explaining features of their pilot $400 million PRI initiative.

Q. What is the [Gates] foundation’s new approach to Program-Related Investments?
A. We are working with a range of partners to use Program-Related Investments (PRIs) to deepen the impact of our work. We believe that investments are the right instruments to use in situations in which our program strategies are best served by partnering with revenue-generating enterprises, such as NGOs, financial institutions or companies. These entities may not be able to access investment capital from the private markets because the markets or entities that serve the poor may be perceived as too risky or costly to serve, or investors don’t have good information to assess the opportunities. By providing investment capital directly or by reducing risk to investors, we can help our partners access the capital they need to grow and demonstrate to the market that financially viable opportunities exist that serve the needs of poor or otherwise disadvantaged persons.  We know we can’t solve all problems with these types of investments – grant-making remains critical for those sectors that can never generate revenues or be addressed by market forces.

We have established a pilot program with an envelope of $400 million to invest in a range of investment opportunities. The capital for PRI investments or guarantees will be provided by this special $400M pool which will be managed by the CFO’s office of the foundation. Out of this pool, we will invest in PRIs that directly and meaningfully contribute to the achievement of the foundation’s charitable purposes.

Q. What types of investments will the foundation do?
A. We will evaluate a full range of investment opportunities that could include:

• Debt investments such as loans to NGOs, financial institutions or companies;
• Equity investments such as investments in venture capital funds or (less commonly) purchases of shares in companies;
• Guaranty investments such as bond back-stops, credit guarantees, or insurance.
• Any PRI opportunity must closely align with our program strategies, from increasing financing for agricultural smallholders in Africa, to supporting charter school facilities expansion, to increasing investment in global health technologies.

I spoke with a colleague who is close to Gates Foundation CFO Alex Friedman, who launched this PRI program, and he told me that a key part of the pilot launch was to organize a new group whose financial returns would not impact the performance objectives of the office of the CIO.  This was intended to free the new PRI group to focus more on social return than on financial return.

It is certainly exciting news that this $400 million, representing roughly 1% of the Gates Foundation’s capital under management, is now available for both financial and social return when invested in partnership with social entrepreneurs.  However, what may be even more exciting is that the intention of the move is to encourage other private foundations to do likewise and for Gates to thus be a catalyst for multiples of the $400 million to show up in the market as risk capital for social enterprises.  Could this be the beginning of large pools of capital available for direct impact investing, social venture funds and private equity funds, and the creation of a true continuum of capital availability in what is today a very nascent social capital market?

Tags: Entrepreneurs Foundation of Central Texas, Gates Foundation, mission related investing, PRIs, RISE, Scott Collier, social entrepreneurs, Triton Ventures

Climb on Board, Austin

Today wraps up the Social Entrepreneur track of RISE, Austin’s SXSW-style conference for entrepreneurs.  It was a lot of fun putting together the track with Jessica Shortall, with lots of help from Annie Frierson, Suzi Sosa, Andy White and the many amazing, inspiring social entrepreneurs in our area.  I’m so impressed with the speakers and panelists that made up the track.  From design-thinking for social entrepreneurs, to domestic microfinance, to technology for social impact, to social investing, to balancing mission and profit, and much, much more.  It was so great to see those working in the gray area between social impact and entrepreneurship together sharing insights, ideas, knowledge, discussion, debate.

I couldn’t get to all of the sessions in the track, and so I’d love recordings of those I missed.  But because RISE is a free conference there is little budget for “extras” like recording equipment and staff.  However, I heard a rumor that some of the sessions were unofficial taped.  If you know of any taped sessions, let me know, and I’ll post them to this blog.  And I will definitely make the case to the organizers of RISE that next year we find a way to tape sessions.  Because this content is just too rich to be shared by only the 25-40 people in the room.

So I wanted to share my takeaways from the RISE Social Entrepreneurship track and thoughts about where we go from here.

First, the takeaways:

• There is tremendous interest and energy around social entrepreneurship in Central Texas
• However, there is little infrastructure or eco-system to effectively support those entrepreneurs
• More social entrepreneurs in the track and attending sessions were women  (that could entirely be based on the fact that the leaders of the track are women, but I think there’s more to it than that)
• There is a debate about whether social entrepreneurs need to bootstrap as long or as hard as traditional entrepreneurs since the same end reward (financial profit) does not really exist for SEs
• Funders of social entrepreneurs are not present in nearly as many numbers as social entrepreneurs
• An “investment banker” or “broker” vetting and connecting social entrepreneurs to potential investors is a key part of the needed ecosystem

And that’s just a beginning list.  There were far too many conversations, insights, war stories, and needs to catalog here.

Which brings me to where we go from here. There is a disconnect for Austin in the realm of social innovation.  When I talk with people in the social innovation space outside of Texas they are always interested to hear that I am from Austin and are sure that Austin is well along the path of launching and growing social entrepreneurs.  Because of Austin’s reputation for progressive ideas, its wealth, its technology background and its rank as the third largest venture capital city in the country, people assume that social entrepreneurship, which often follows from these things, is burgeoning here.  When I tell them that isn’t the case, they are shocked. What is holding Austin back?

We heard some provocative conversations this week and saw some inspiring examples of social entrepreneurs who are making it and funders who are helping them along.  But that’s not enough, not even close.

Social entrepreneurs need access to significant funding at every step of the game from seed to growth, whether their  model is nonprofit, for-profit or a hybrid.  We need to give social entrepreneurs the skills to create solid business strategy around a great idea, language for creating a compelling pitch, infrastructure to grow results.  We need to create communities for social entrepreneurs and social investors to interact, network, learn from each other, forge partnerships.  But most of all we need to collectively say, it’s not enough.  One week a year is not enough.  A handful of social entrepreneurs and social investors in a city of 1.7 million is not enough.  Social innovation is a growing industry, one that Austin should and must climb on board.  I’m not satisfied.  I want to see more.  A lot more.

Tags: Austin, Central Texas, design-thinking, microfinance, RISE, social entrepreneurs, social innovation, Social Investing

Can PRIs Support Fundraising and Capacity Building?

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

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

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

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

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

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

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

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

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

And second, for the nonprofit:

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

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

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

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

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

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

The Social Side of Entrepreneurship

In less than a month, Austin’s premier entrepreneurship conference, RISE, will be in full swing. March 1st through 5th brings a SXSW-style conference that is quickly becoming the place to be for anyone thinking about launching or growing an enterprise. This year, RISE has added an official social entrepreneurship track to the conference, which seems to be a sign of the times. Social entrepreneurship is starting to take its rightful place next to “regular” entrepreneurship. Perhaps in the future there won’t even be a distinction.

But until then, I’m delighted to announce the lineup of this year’s Social Entrepreneurship track at RISE. Social Velocity is hosting the track, and it is sponsored by the Silverton Foundation.  Jessica Shortall, Director of Giving at TOMS Shoes, and I have put together what we think is going to be a pretty great group of sessions exploring all aspects of social entrepreneurship. In addition, Blake Mycoskie, founder of TOMS Shoes, will be one the keynote speakers of RISE on Tuesday, March 2nd.

The Social Entrepreneurship track will run on Tuesday and Wednesday of RISE week, March 2nd and 3rd. Here is the lineup of sessions:

• Social Investing, Social Entrepreneurship and Social Profit
• Overview of Social Innovation
• Austin’s Emerging Social Capital Market
• Social Enterprise Case Studies
• Seeking Capital for Social Enterprise
• Design Thinking and Social Entrepreneurship
• Economic Development: Microfinance to CDFIs
• Social Media and Social Impact
• Balancing Social Mission and Business Pressures

You can find out more about the entire Social Entrepreneurship track at the RISE website and sign up for those you want to attend. Sessions are already filling up. I hope to see you there!

Tags: Blake Mycoskie, RISE, Silverton Foundation, Social Entrepreneurship, Social Velocity, TOMS Shoes

MLK Day of Service Virtual Town Hall

On this Martin Luther King day, January 18th, Points of Light Institute and HandsOn Network will engage the nation in a MLK Day Virtual Town Hall—an online, interactive dialogue about community service.

Through this virtual town hall, you can tune in to conversations across seven cities, highlighting over 70,000 community organizations at the forefront of interaction, civic engagement and community service.

If you want to see the virtual town hall meeting, come back here on Monday, January 18th. The schedule for the simulcast is as follows:

Monday January 18 Simulcast Schedule

• 8:00 AM EST – 8:30 AM EST Atlanta – Opening at the hub (HON office)
• 8:30 AM EST – 9:30 AM EST Atlanta – Hands On Atlanta Annual King Summit Freedom Rally at Morehouse School of Medicine Auditorium with Congressman John Lewis
• 9:30 AM EST – 10:00 AM EST Back to the hub (HON office), pre-taped messages (i.e., Philadelphia)
• 10:00 AM EST – 11:00 AM EST Washington, D.C. – Greater DC Cares service project at Powell Elementary Schools with Council member Muriel Bowser
• 11:00 AM EST – 12:00 PM EST New York City – Youth HandsOn service project at James Weldon Johnson School
• 12:00 PM EST – 1:00 PM EST Sacramento – Hands On Sacramento service project at Quinn Cottages with Mayor Kevin Johnson
• 1:00 PM EST – 2:00 PM EST Phoenix – HandsOn Greater Phoenix service project with Mayor Phil Gordon
• 2:00 PM EST – 3:00 PM EST Chicago – Cities of Service announcement with Mayor Michael Bloomberg
• 3:00 PM EST – 4:00 PM EST St. Louis – United Way of Greater St. Louis service project and dialogue
• 4:00 PM EST – 4:30 PM EST Atlanta – Closing at the hub (HON office)

I hope to see you back here on Monday!

Tags: Day of Service, HandsOn Network, MLK Day, Points of Light Institute

Constraint or Opportunity?

One of my favorite organizations and a critical player in the creation of a well-capitalized nonprofit sector, the Nonprofit Finance Fund, is seeking feedback.  NFF is a community-development fund that makes millions of dollars in loans to nonprofits and pushes for fundamental improvement in how money is given and used in the sector. Last March they published the results of a survey about how the recession is affecting the nonprofit sector.  They plan to conduct a similar survey this spring, and, in a bow to crowd-sourcing and transparency, are soliciting feedback on questions to ask in this year’s survey.  They are soliciting this feedback through comments left at the Tactical Philanthropy blog.

Last year’s survey was a good one, but a key element was missing.  The survey focused solely on the challenges that the  recession brought. Question after question had a similar pessimistic, constraint-filled theme. For example the only options available to a survey respondent in the question “To successfully weather the current economy, please check all actions below that you have taken in the last 12 months or are planning to take in the next 12 months” were negative.  The options assumed that the recession provided only challenges, not opportunities, to nonprofits. The possible responses were:

• Develop a ‘worst case scenario’ contingency budget
• Reduce staff or salaries
• Freeze all hires and current staff salaries
• Reduce staff hours (short weeks, furloughs, etc.)
• Reduce staff benefits
• Reduce or eliminate programs
• Collaborate with another organization to provide programs
• Collaborate with another organization to reduce administrative expenses
• Merge with another organization
• Reduce or refinance occupancy costs
• Sell assets such as a building or securities
• Use reserve funds
• Delay payments to vendors
• Speed up the collection of receivables
• Engage more closely with your board through more frequent reports and meetings when necessary
• Hold conversations with funders to explain your situation and projections and/or to discuss the use of currently restricted grants

19% of respondents said “none of these” or “other.”  I’m curious about those respondents.  Is anything innovative going on there?  Maybe, maybe not, but is anybody asking?

In the business world, examples abound of companies that capitalized on a recession to gain market share, snap up talented employees from their competitors, create a new product or service, and so on.  Are there really no examples of innovation in the face of adversity in the nonprofit sector?  Or are we so mired in the charity mindset to think that innovation in the nonprofit world is not possible, particularly when economic times are tough.

I understand that this survey was primarily intended to uncover the financial situation of the nonprofit sector, but was there really no room to understand any potential opportunities the recession afforded and how nonprofits might be  capitalizing on those opportunities?  I don’t mean to be a Pollyanna in the midst of a dire situation, but if we continually throw pessimism and constraint at the nonprofit sector doesn’t it make sense that they will continue to feel constrained and pessimistic?  Is there a possibility that some innovation exists out there?  Perhaps there are examples of nonprofits who bucked the trend and took the recession head on, revamping their approach to the social problem they are working on, or the funding of their operations, or the delivery of their services, or their response to competitors.

Let’s uncover the Southwest Airlines (creator of the “Grab Your Bag, It’s On” anti-recession ad campaign) of the nonprofit world who are taking the recession by the throat, making some bold moves, and innovating amid constraint.

We’ve seen it here at Social Velocity.  One of our clients, Heart House, an after-school program for at-risk children, decided last year to kick their vision for growth into gear, despite the recession.  The program, currently serving 500 kids in Austin and Dallas, knows they have a great, scalable model, so they put together a growth plan to go statewide.  Social Velocity helped them refine the plan and create an investor pitch around it, and they went out to raise $1.5 million in growth funding, recession be damned.  A few months into their campaign they’ve already raised a third of the money.  They don’t sit around talking about constraint and the horrible economy, yet they are feeling the pinch just like the rest of us.  They seized the opportunity:  when funders have nonprofit after nonprofit coming to them begging for money to get by, Heart House talks about something completely different.  They are talking about big plans, a grand vision, results and a way to scale those results, a way to solve Texas’ afterschool problem.  And funders are intrigued.

Let’s uncover those stories. Let’s hold them up as an example of how constraint can breed innovation.  That’s inspiring.  That’s encouraging.  That’s bold.

Tags: Heart House, Nonprofit Finance Fund, recession, Social Velocity, Southwest Airlines, Tactical Philanthropy

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