Social Velocity » Innovators

The View from an “Old” Social Enterprise: An Interview with Jim Gibbons

Nell Edgington — Fri, 10 Feb 2012 16:56:53 +0000

In this month’s Social Velocity blog interview, we’re talking with Jim Gibbons, president and CEO of Goodwill Industries International. Goodwill is such an interesting case because the organization has been practicing social entrepreneurship since long before it became cool, which I’ve talked about before. Goodwill started in 1902 in Boston and in 2010 provided jobs and job training to 2.4 million people with a budget of $4 billion. Gibbons earned his B.S. in industrial engineering from Purdue University, and a M.B.A. from the Harvard Graduate School of Business Administration, where he was the first blind person to graduate with a master’s in business administration.

You also can read past interviews in our Social Innovation Interview Series here.

Nell: Goodwill has employed a social enterprise model for over a century, long before social entrepreneurship was a buzzword. What made Goodwill so forward-thinking?

Jim: Goodwill is often referred to as “the original social enterprise” particularly by leading social entrepreneurs in the field such as Jim Fruchterman. Goodwill’s roots are deeply established in the belief of the human potential of dignity and self-sufficiency, and in an early learning that the people we serve want a “hand up, not a hand out.” Our founder, Reverend Edgar J. Helms, engrained in our culture his strongly held belief that we must challenge the status quo and be “dissatisfied until every person with a disability or disadvantage has an opportunity to develop to their fullest potential.” This drives the entrepreneurial spirit that exists at every independent, community-based Goodwill agency, allowing them to continually adapt and reinvent themselves in order to meet the needs of local communities.

Nell: How do you think an “old-fashioned” nonprofit like Goodwill fits into this growing social innovation movement? How do you make sure Goodwill is part of that movement and doesn’t get left behind?

Jim: The Goodwill brand is a household name and fortunately still leads efforts in social entrepreneurism, community collaborations and innovation. By staying ahead of the curve, we don’t fall behind. Goodwills are relentless in their desire to understand and meet the needs of the diverse local communities in which they operate. Goodwills challenge themselves to remain relevant and meaningful to the three million people we collectively serve each year. Goodwills across the United States and Canada have found the sweet spot of uniting enterprise with caring, ensuring that our social enterprise model is optimized in a way that empowers people and builds communities that work.

Nell: Goodwill has many more competitors these days than it did 10 years ago, particularly from for-profit competitors. How do you manage the competitive landscape and is it having a negative effect on your model?

Jim: As a market leader in this space, Goodwill always keeps its eye on external forces. We use our social enterprise model to advance millions of people who might not otherwise have the tools or help to succeed in life. We admire legitimate and credible nonprofits that leverage similar models to achieve their mission. While we do not condone the practices of those who market themselves to the public as something they are not, we welcome fair and honest competition, as we have earned the trust and support of more than 66 million customers as well as the people we serve every day. Goodwill earns the trust of shoppers by providing excellent value for their hard earned money. In addition, we earn the trust of donors through the assurance that we maximize the value of their donations in order to return the most benefit to the people we serve in local communities. At Goodwill, your donations generate opportunities for people to achieve economic stability, and build strong families and vibrant communities by offering job training, employment placement services and other community-based programs, such as financial education and youth mentoring. In addition, 84 percent of Goodwill’s revenues go directly into these programs, so members of the public can be sure that their donation(s) will have a direct impact on the people in your community. Last year, Goodwill’s retail enterprise revenues grew more than 12.5 percent, indicating that the public, even with increased for-profit competition, still values and trusts Goodwill.

In addition, we plan to remain a market leader through responsible community leadership. Across the United States and in Canada, we are working with municipalities and local governments to ensure that misleading donation bins are clearly marked so that the public is aware of whether or not their donations go to help someone in need, or if they simply add to a company’s profits. We also teach donors to check out a charity’s legitimacy and revenue information about overhead and administrative costs by contacting their attorney general or secretary of state’s office, a charity rating agency such as Charity Navigator or GuideStar, or online resources such as GreatNonprofits or Philanthropedia.

Nell: What do you do at Goodwill to continually innovate and reinvent the model? How is it possible to continue to innovate at a 100+ year old organization?

Jim: It’s not only possible to innovate, it’s necessary if we want to remain a leader in our market. At Goodwill, we don’t think of innovation as the creation of the next iPhone, but rather as the next idea that allows us to serve the communities we’re a part of in the most meaningful and impactful way. For example, at the Goodwill Industries of South Florida (Miami), they innovate every day and put thousands of people with disabilities back to work. People with disabilities enrolled in their programs learn apparel manufacturing, flag manufacturing, document destruction, and janitorial services. The Goodwill offers a broad range of flexible business solutions to private and public companies, while helping their employees achieve their independence. And it doesn’t stop there. We are committed to customizing the assistance workers need to achieve their peak performance, and we encourage them to continue to advance in their careers.

In Winston-Salem, NC, and Eugene, OR, (Goodwill Industries Northwest North Carolina and Goodwill Industries of the Columbia Willamette), we deploy ’Prosperity Centers’ that optimize community resources and drive community collaboration for the benefit of the people. Prosperity Centers are dedicated to assisting people in the community to succeed financially. That doesn’t just mean helping workers find jobs; it means giving them all the tools they need to build financial security and independence once they have a job, including resume-writing assistance, skills assessment, career counseling, access to computer and high-speed internet, and help with interviewing skills and financial counseling. At each of these centers, financial professionals talk to participants about their financial goals, and help them come up with a personal plan to meet those goals, whether that’s regularly paying their bills on time, reducing personal debt, starting savings to go to school, or investing in a big purchase like a car or home. With like-minded agencies partnering together, they are able to harness their resources, eliminate redundancies, strengthen their impact, focus the delivery of their services to meet the needs of local communities, and have a meaningful impact on their citizens.

At the San Francisco Goodwill, we’ve deployed the “Back On Track” program. A partnership with the San Francisco District Attorney’s Office and the Family Services Agency, “Back On Track” provides intensive case management to individuals who have been arrested for a non-violent, first-time drug sale felony. Goodwill provides job readiness workshops, case management, career advising, life skills workshops and job training and education placement. For every individual we train, we save the government an estimated $20,000 in jail/prison costs. This program has a less than 10 percent recidivism rate – compared to a 75 percent rate with other programs.

In Cincinnati, the Ohio Valley Goodwill Industries, paves an example for other service organizations that provide services to veterans. One hundred percent of the veterans they serve are homeless, and many have physical disabilities or mental health issues such as PTSD and TBI. Each veteran has a case manager who works with him or her to develop an individualized program plan. The Goodwill provides transitional housing for these veterans and strives to provide services to them in a holistic manner in order to achiever lasting success, a return to family, community and self-sufficient living. All of these innovative examples are shared across the Goodwill network, and modified and adapted to best meet the needs of local communities.

Nell: Goodwill is pretty active in the social media space and in fact you do a fair bit of Tweeting yourself (@jdgibbons). How have you integrated social media into your mission? What does it allow you to do?

Jim: Goodwill is a networked enterprise where the local Goodwills make up the heart and soul of the brand, and they participate in social media with aligned brand messages that communicate their local activities and impact. We’ve integrated social media into our global and national communication strategies in a powerful way because it’s an awesome tool for educating people about our brand. And we’re giving attention to having real conversations at the level that is important to our stakeholders and builds relationships with them.

Nell: You were recently appointed by President Obama to the White House Council for Community Solutions, which is a pretty interesting group working on bringing the public, private and nonprofit sectors together to solve problems. What is that group working on and what results are you seeing so far?

Jim: It’s exciting to work with a group of leaders from a variety of sectors to raise awareness on how collaborations solve problems in a profound way. Recently, the Council announced its commitment to expand job opportunities for youth through the White House Summer Jobs+ initiative. The initiative is a call-to-action for businesses, nonprofits and the government to provide opportunities for youth to obtain life skills, education, training, and social supports that are relevant for long-term employment, and to work together to provide pathways to employment for youth ages 16-24 (referred to as ‘opportunity youth’) who are low-income or face disadvantages to finding employment and related opportunities.

Goodwill will be supporting the Summer Jobs+ program by hiring 1,200 youth ages 16 to 24. The 158 Goodwill headquarter agencies across the United States will also provide more than 3,200 youth with life skills services, including communications, time management and teamwork; more than 2,300 youth will receive work skills services. In addition, 2,000 youth will be provided learn and earn opportunities, where they will gain the ability to acquire their first paid employment position, either through the form of paid internships or permanent positions that provide on-the-job training at Goodwill locations. Thousands of additional youth will also be provided with virtual career mentoring and exploration services.

The Summer Jobs+ initiative was created in response to research that shows that at least one in six young people ages 16-24 are disconnected from the two systems that offer the greatest hope for their future: school and work.

About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.

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Related posts:

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What Social Entrepreneurs Can Learn From an Old Nonprofit

New Tools to Launch a Social Enterprise or Grow Your Nonprofit

10 Great Social Innovation Reads: January 2012

Nell Edgington — Fri, 03 Feb 2012 16:21:31 +0000

I can’t believe that January is already over, it was a complete blur. Nonetheless there was lots to read and ponder in the past month in the world of social innovation. Below are my ten picks of the best reads, but as always, please add what I missed in the comments. And if you want to see other things that caught my eye, follow me on Twitter, Facebook, LinkedIn or Pinterest (I’m starting to really love this new one!).

Socialbrite has created a mega calendar of 2012 nonprofit & social good conferences. Perfect for planning your year ahead.

In their Fast Company article, It’s Time To Start Judging Nonprofits Like For-Profits, Alexa Clay and Jon Camfield tell donors “Do not be turned off by high overheads. They’re healthy. They mean the organization has a longer-term view on its role in making change.” Amen to that!

Crowd-sourcing meets behavioral economics meets iPhone apps. A new approach to getting people to eat better. Love it.

FastCompany profiles the business pioneers who really understand and embrace the new chaos in which we all now operate. This should be required reading for any leader (for-profit or nonprofit).

I love it when we can use history to understand current trends. Phil Buchanan, CEO of the Center for Effective Philanthropy, reviews historian Oliver Zunz’s new book, Philanthropy in America. In so doing, Buchanan describes 7 “new” philanthropic concepts that really aren’t so new.

Jason Cohen from A Smart Bear always has a way of finding hope in the entrepreneurial process. Although this post is focused on “traditional” entrepreneurs, I think it holds for social entrepreneurs as well: Entrepreneurship is a torturous chaos, until it isn’t.

I have always said that in order to be a truly effective social change leader, you must be able to fully wield the financial sword. Kate Barr from the Nonprofit Assistance Fund in Minnesota breaks it down in the Executive Director’s Guide to Financial Leadership

January saw a pretty impressive mobilization of people via social media to protest against SOPA (the Stop Online Piracy Act) and PIPA (Protect Intellectual Property Act). Dowser helps us understand what it means for online protest more broadly.

In an increasingly competitive and resource-strapped environment it is even more critical that nonprofits be able to demonstrate the impact of their work. Here is a great example of how a Michigan arts collaboration demonstrates the economic impact of the arts in their community.

Hull House, one of the oldest and most impressive American nonprofit organizations closed its doors in January. The Bridgespan Group explains the implications.

Photo Credit: ilovememphis

Related posts:

10 Great Social Innovation Reads: July

10 Great Social Innovation Reads: May

10 Great Social Innovation Reads: June

Overcoming Board Fundraising Excuses

Nell Edgington — Wed, 25 Jan 2012 19:13:10 +0000

It’s a point of debate in the nonprofit sector whether all board members of a nonprofit should be required to help raise money. Bill Ryan (co-author of the book Governance as Leadership) argued that the fundraising requirement of many nonprofit boards is “a giant, fast-growing myth that ends up choking good governance to death.” And I often hear from nonprofit leaders and board members that requiring every single board member to participate in money-generating activities just isn’t realistic. I strongly disagree. I’m a firm believer in a give/get requirement for every board.

But, that doesn’t mean that every board member must ask donors for money. Rather, a nonprofit must take a strategic approach to employing at least some of every board member’s time toward bringing money in the door. And there are many things board members can do, beyond making an ask, to raise money (which is the subject of an upcoming post). But first, nonprofits have to move beyond their many excuses for why every board member can’t help raise money.

Here are the some of the most common excuses and why they don’t fly:

“We want client representation on our board, but our clients don’t have money.”
Even though a client may not have access to large pools of money, they can still absolutely help bring money in the door. Because they have been helped by the organization, they can provide an amazing testimonial to potential donors about the impact of the organization. Why not take that client board member on some meetings with prospects? Their presence and their story might be enough to turn a prospect into a donor.

“We need a specific skill set (legal, marketing, policy expertise) and those board members may not have a network that can give.”
A board member who doesn’t count potential major donors among their friends still has networks to draw from. Everyone has co-workers, clients, vendors, neighbors, family, and/or social media followers. When you start to ask your board to systematically think through who they know, you would be surprised about how vast your organization’s potential network is. Just because a board member doesn’t know the list of 50 donors every other nonprofit in town is going after, doesn’t mean they don’t know people.

“Some board members aren’t good at fundraising.”
Actually the vast majority of people aren’t good at fundraising because it isn’t widely understood. But so what? Provide your board some fundraising training and have them practice on each other. Then pair greener board members with more seasoned ones to help them learn. Or ask another friendly nonprofit to have some of their effective board members come talk about their experiences raising money.

“Some board members are uncomfortable with asking for money.”
Yep. Actually most people are uncomfortable asking for money. Money is a taboo subject in our society. But instead of viewing money as a dirty thing, start viewing it as a critical component of the work your nonprofit does. Reframe money as a great, necessary opportunity to help your organization do more and better. Bring everyone’s discomfort with money out into the open and turn it something positive. Get the board excited about raising more money so that more can be accomplished.

“We want board members with program expertise to focus on mission, not money.”
I suppose in an ideal world it would be great if you could have mission without money, but that is just not the reality. Your organization does not have endless resources. Money is limited and therefore your programs and activities must be limited by an understanding of that resource. A board member cannot adequately discuss or plan for programs without intimate knowledge of and experience with the money that makes those programs run. You simply cannot separate the two. And the sooner you get those “program experts” contributing to the financial bottomline of the organization, the sooner you will have stronger, more sustainable programs.

Money is what makes a nonprofit and it’s work viable. It makes no sense to say that some board members should help bring it in and others should be excused. We have got to stop separating money, and the activities associated with it, from other aspects of a nonprofit organization. It makes no sense.

If you want help training your board on how to bring money in the door, check out the Speaking page of our website.

Related posts:

9 Ways Board Members Can Raise Money Without Fundraising

Financing Not Fundraising: Jump Start Your Board

Getting Your Board to Fundraise – Recorded Webinar

10 Great Social Innovation Reads: December

Nell Edgington — Wed, 11 Jan 2012 18:32:07 +0000

Although December was a “shorter” month because of the holidays, there was still much to read, particularly about what the new year might bring. Below are my 10 favorite reads from the past month, but as always, please tell me what I missed in the comments. And you can read other months’ 10 Great Reads lists here.

Since December was the last month of the year, there were lots of look back and look ahead posts. The PhilanTopic blog did a whole series of posts on 2011 Year in Review: What To Expect in 2012. And there is also 50 Economic Numbers from 2011 Too Crazy to Believe. And best of all, the Chronicle of Philanthropy launched a whole Outlook 2012 section of their site.

A follow up to the Money for Good report released a couple of years ago, the new Money for Good II report finds that donors would shift $15 billion to more effective nonprofits if they had better information. This is food for thought for the growing efforts (GuideStar, GiveWell, CharityNavigator, to name a few) to track and report on nonprofit results.

We are two years into the 5-year Social Innovation Fund experiment launched by the Obama Administration and what have we learned? Carla Javits from REDF and Lisa Jackson from New Profit, two recipients of SIF intermediary funding, offer their views.

From Capital Institute, an impassioned plea for foundations to make use of mission-related investments in order to tap into their (much larger) endowment assets and create even more social impact.

Rebecca Thomas and Rodney Christopher of the Nonprofit Finance Fund provide a fabulous description of how general operating support, capacity building grants and change capital differ in the nonprofit world. These are distinctions that every nonprofit leader should understand and employ.

A new group, Insight Labs in Chicago, provides nonprofits with a roomful of big thinking volunteers to hash out solutions to challenges the nonprofit is facing. Kind of a cool approach.

The Dowser blog profiles Project Interaction, a really interesting approach to educating kids. It is design thinking meets public education meets social problem solving. I love it.

Jessamyn Lau from the Peery Foundation writes a provocative post on their blog arguing that we need more patient changemakers in the social entrepreneurship field.

In the Stanford Social Innovation Review blog, Lisa Witter and Courtney Martin argue that we need to make a distinction between cultural and social entrepreneurship. Social entrepreneurship, they argue, changes markets and systems, whereas cultural entrepreneurship changes hearts and minds. Fascinating.

I always like finding a new “tell it like it is” blog, and so I was happy to find Nonprofit Nate, and his post Thank You For Your Trash, about how nonprofits need to take a step back and weigh the costs/benefits of in-kind gifts.

Photo Credit: Kenski1970

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10 Great Social Innovation Reads: February

10 Great Social Innovation Reads: November

10 Great Social Innovation Reads: July

The Next Generation of Philanthropy: An Interview with Jessamyn Lau

Nell Edgington — Thu, 05 Jan 2012 15:41:30 +0000

In this month’s Social Velocity blog interview, we’re talking with Jessamyn Lau. As Program Leader of the innovative Peery Foundation, Jessamyn helps shape the foundation’s strategy, develops programs, strengthens the foundation’s portfolio, and supports existing grantees. Jessamyn’s MBA from Brigham Young University and time spent with Ashoka U have given her the perspective and skill-set to help the foundation develop new methods to support and build the field of social entrepreneurship. Jessamyn is currently working with BYU’s Ballard Center to create the Peery Social Entrepreneurship Program (PSEP), a cross campus initiative providing opportunities for students and faculty to engage with social entrepreneurship through curriculum, experiential learning, and research.

You can read past interviews in our Social Innovation Interview Series here.

Nell: At the Peery Foundation you have done some really interesting experiments with social media, even adding an element of crowd-sourcing via Twitter to your strategic planning process. But recently you have gone back and forth about whether you want to continue your PFWhiteboard blog. What has your thinking been about how social media fits into the overall work of the Peery Foundation?

Jessamyn: One thing we know about social media is that it’s a good tool for is spreading the word about our partners and their work. 90% of what we post/tweet is about our portfolio partners. Every now and then we try to figure out how else to deliberately use social media. We’ve tried stuff that hasn’t worked (so we stopped doing it), and we’ve tried stuff that did seem to yield value for us and others. In general it’s still throwing spaghetti at a wall and seeing what sticks. Intuitively we think social media is a good thing for our creativity, learning, and listening, however, we don’t feel tied to it as a core part of our strategy or practice. When it makes sense we use it, when it doesn’t we don’t.

Nell: What do you think holds foundations back from using social media and embracing greater transparency? What do you think will make that change?

Jessamyn: The tricky thing with social media is it’s really hard to link it to outcomes. Even when tangible examples of outcomes are illustrated it’s often a first-mover advantage and not something that will produce the same results if everyone did the same thing. If foundations could see how social media directly led to more impact it would be an easier sell. It’s a similar story with transparency. Being transparent requires change, time, dedication and a certain amount of risk. Without a clear and strong argument for how that leads to more impact it’s easier not to take the risk and stay quiet.

Another issue is strategic planning, which, at times, can become more of a bane than a boon to foundations. When it comes to social media many foundations think they need a strategy and a full blown plan before they will start using it. As with many things it’s hard to know exactly how Twitter or Facebook will be useful until you give it a go and play around a
little.

For the most part I think the change will only come with an increase of millennial philanthropists, foundation ED’s and program officers who come with a share-as-default mentality and bias towards creative experimentation in public.

Nell: You recently did a fascinating blog post about how the social entrepreneurship movement is encouraging young people to think they can solve the world’s problems, without much real world experience. How do we balance Generation Y’s zeal to find solutions with their youth and lack of experience?

Jessamyn: I don’t think I know the full answer to that, yet. My opinions on this point are still developing as the Peery Foundation works closely with BYU to build a cross-campus social entrepreneurship program. I’m not sure the overall problem is too much zeal or youth, or even too little experience -all of these things provide incredible value in the right context. I think what’s lacking are clearer expectations and support for students to build self-awareness and deliberate preparation in their development as social innovators. As I said, I’m still figuring it out -watch the PF Whiteboard over the coming months for more on this.

Nell: The Peery Foundation is one of few foundations that do mission-related investments. How did you decide to move into that realm and what do you think holds other foundation back from MRIs?

Jessamyn: Our primary function is to support and serve the social entrepreneurs we work with. We try to keep our funding as flexible as possible. Peery Foundation funding is generally unrestricted and the structure of a grant is often co-crafted with the entrepreneur. We have come to realize that entrepreneurs with differing business models, or at differing life-cycle stages, need different types of capital. Once we believe in a SE and their model for addressing poverty we want to always be open to providing the type of capital that they need at the time they need it.

We’re still at an early stage in developing our capacity to provide debt and other funding outside of philanthropy. In our philanthropic funding we’re not paper heavy and our agreements are very trust-based. It was definitely daunting to explore this new realm of traditional investment due diligence and contractual agreements. So far we’ve found the kind of support we need to help us make the leap fairly painlessly through the Toniic Network, and from sources such as Silicon Valley Community Foundation and University Impact Fund, and still feel like we’re able to retain our low-paper, trust based partnership approach to the extent that makes sense.

Nell: In some ways philanthropy has been a bit left behind by the impact investing movement. Why do you think that is and do you think philanthropic giving and impact investing will become more integrated?

Jessamyn: The potential of impact investing is huge, though I’m not sure I agree with the statement that impact investing (ii) has left behind philanthropy (charitable giving from individuals, corporations and foundations totaled over $290B in the US alone for 2010, impact investing is estimated at $50-100B in 2011). Though there is a lot of attention and discussion surrounding impact investing, there are still relatively few organizations actively channeling dollars to ii. Even in the future (when I think ii will absolutely eclipse philanthropy by the numbers), I see ii and philanthropy as very complimentary. In many cases philanthropic capital prepares the way for ii dollars, or continues to fund pieces of a model (overhead or continuing innovation) that ii capital can not.

Indeed, there are many incredibly efficient and effective models of social entrepreneurship with models not conducive to impact investment capital – they will probably always rely on philanthropic dollars. There will always be an important role for philanthropy to play. Philanthropy is the ultimate risk-taking capital. We should not lose sight of this or think that ii is here to replace philanthropy.

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Next Generation of High Engagagement Philanthropy: An Interview with Carol Thompson Cole

Data and the Future of Philanthropy: An Interview with Lucy Bernholz

The Future of Financing Social Change: An Interview with Antony Bugg-Levine

10 Most Popular Posts of 2011

Nell Edgington — Mon, 19 Dec 2011 17:12:57 +0000

As 2011 comes to a close, I wanted to provide a list of the ten most popular Social Velocity blog posts this year. Then I’m taking a break from the blog until January.

I hope you all find time over the holidays to relax, unwind and spend time with friends and family. Thank you all for reading and contributing to the Social Velocity blog this year. I really appreciate all of my readers and look forward to talking with you in the new year. Happy Holidays!

The 10 most popular Social Velocity blog posts of 2011 were:

Photo Credit: Charline Tetiyevsky

Related posts:

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5 Nonprofit Trends to Watch in 2012

5 Nonprofit Trends to Watch in 2012

Nell Edgington — Thu, 15 Dec 2011 16:20:35 +0000

My annual predictions for the coming year are probably a bit more wishful thinking than actual prediction. It’s hard to say if my predictions for 2011 became a reality for the sector as a whole. But I am ever an optimist and continue to think that the nonprofit sector is getting smarter, more effective, and better able to create real, lasting change in our communities. I truly believe that our challenging economy offers nonprofits a real opportunity to reinvent themselves.

So here are my predictions (hopes) for what the nonprofit sector will move towards in 2012:

More Open, Engaging Organizations
Smart nonprofits are getting better at engaging armies of supporters. In order to do that, they have to cede some control. Nonprofits that can allow volunteers, donors and advocates to engage their friends in their own way will unleash a growing army of support for their organizations. Those nonprofits that continue to control the message and the method, that only engage their donors when they need money, and ignore the increasingly networked world will wither on the vine.

Smarter Boards
I am an endless optimist when it comes to nonprofit boards of directors. Boards are, for the most part, dysfunctional, but I believe that they are getting smarter and more effective. I think boards will start asking more and better questions, increasingly put themselves to their highest and best use, focus more on strategic issues as opposed to day-to-day tasks, empower their staff leadership to take the organization in more innovative directions, and start putting their money (and their networks) where their mouth is. Because this new harsher environment absolutely necessitates a smart, strategic, innovative board.

More Honest Communication Between Nonprofits and Their Donors
Oh yes, I do, I do believe it. The nonprofit sector’s proclivity to endlessly beat around the bush, tell donors what they want to hear, and sugar-coat the truth will start to wane in the new year. Because the reality is that a severely under-resourced nonprofit sector is the new normal. That truth is harder and harder to hide. Nonprofits need more money for infrastructure, more and better staff, technology. And they need their donors to step up to the plate and fund it. Those nonprofits that continue to fear their donors will continue to struggle. Those that take the leap and tell donors how it is, how it REALLY is, will propel themselves out of the starvation cycle.

More Strategic Approaches to Solving Social Problems
It’s increasingly meaningless for nonprofits to talk about the “good work” they do. In order to attract donors, nonprofits must be able to articulate what they do and how it results in change. This necessitates an overall strategic approach to their work. From creating a theory of change, to developing on a comprehensive strategy, to raising the money required to execute on that strategy, to aligning money and mission, to evaluating their efforts, to translating their evaluation into a compelling story, nonprofits have to get more strategic. Those organizations that take a step back and create, and fully integrate their organization into, a long-term plan will be much more successful and sustainable.

More Financed Nonprofits
As part of this more strategic approach, nonprofits will (must) move towards a broader, more strategic approach to funding their work. They will realize that the hamster wheel of chasing receding dollars in a scattered approach just isn’t going to cut it anymore. As the fundamental economic restructuring that we are currently experiencing continues, nonprofits must create a financial model for their work. The financial status quo just will no longer work in the nonprofit sector.

I’m not a fortune teller, but I am an optimist. I have tremendous hope for our great nonprofit sector. We may be in the depths of an on-going, structurally transformative recession, but it in no way is the death knell for the nonprofit sector. It is simply an opportunity for nonprofits to get smarter, more honest, more open, more strategic, and more sustainable. And that’s exciting.

Photo Credit: riptheskull

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A New Strategy for Nonprofit Financing in 2012

A New Approach to Nonprofit Funding: Financing Not Fundraising Webinar Series

Nell Edgington — Tue, 13 Dec 2011 17:57:48 +0000

I’m delighted to unveil today our new Financing Not Fundraising Webinar Series. In each of the last three months I held an overview Financing Not Fundraising webinar that explained the concept and how nonprofits should approach their money generating activities in a very different way. This webinar is based on our popular Financing Not Fundraising blog series. Because the overview webinar was so popular and there was such a demand for more in-depth, topic specific webinars, I decided to launch a webinar series beginning this coming January. This series will take the individual concepts within Financing Not Fundraising one-by-one.

Below are the first four webinars in this series. As the year progresses, we will add additional webinars. There will be one Financing Not Fundraising webinar each month. And if you missed the overview webinar, you can still view a recording of it here.

I hope you’ll join us for these webinars!

Financing Not Fundraising Overview-Recorded Webinar
This recorded webinar from December 2011 shows nonprofits what this broader approach to securing the overall financing necessary to create social change looks like, including:

•   How to align your nonprofit’s mission with the money needed to deliver on it
•   Why a message of impact results in more money
•   Understanding the critical difference between revenue and capital
•   Why overhead isn’t a dirty word anymore
•   How and why to calculate the net revenue of money raising activities
•   When to explore new revenue streams

Download the Webinar

Creating a Financing Plan
Tuesday, January 24, 2012
12:00 noon -1:00 pm Eastern

This webinar will help nonprofit leaders create an overall financing plan to bring money in the door. This interactive webinar will help nonprofit leaders develop a plan that includes:

•   All revenue streams flowing to the organization
•   A strategy for funding programs and operations
•   Opportunities to raise money for infrastructure
•   Tactical steps with activities, deliverables, people responsible
•   How to divide tasks by staff and board members
•   Ways to monitor the plan going forward

Finding Individual Donors
Wednesday, February 22, 2012
12 noon-1:00pm Eastern

Individual donors make up 80% of the private money flowing to the nonprofit sector, yet many nonprofits don’t know how to find and communicate with individual donors. This webinar will give you tools and strategies to:

•   Engage your board in individual donor fundraising
•   Use social media to connect with individual supporters
•   Create events that resonate with individual donors
•   Identify prospects
•   Create a system for engaging individual donors
•   Launch a major donor campaign

Creating a Message of Impact
Tuesday, March 27, 2012
12 noon – 1:00pm Eastern

No one likes to beg for money. And donors increasingly aren’t moved to give through the tin cup approach. A far more effective way to communicate with potential donors is to talk about the impact your nonprofit is having in the community. This webinar will help your nonprofit:

•   Differentiate between donations and investments
•   Talk about what your nonprofit does in the community
•   Create a compelling case for support
•   Target donors who care about your work
•   Get your board excited about asking for money
•   Articulate a social return on investment (SROI) for donors

Raising Capacity Capital
Wednesday, April 25, 2012
12 noon – 1:00pm Eastern

Capacity capital is the money that nonprofits desperately need, but find so hard to raise. It is money for infrastructure and organization building. It supports things like revenue-generating staff, launch of an earned income business, technology and systems, evaluation, training and consulting. If you want to move your organization out of the starvation cycle, you have to learn how to raise capacity capital. This webinar will show you how to:

•   Talk about the importance of capacity capital to donors and your board
•   Create a budget for the capacity dollars you need
•   Develop a campaign goal
•   Break the goal into donor ask amounts
•   Identify prospective donors
•   Give your board a role in the campaign

Related posts:

Financing Not Fundraising Webinar Series

Financing Not Fundraising E-Book

A New Strategy for Nonprofit Financing in 2012

The Future of Financing Social Change: An Interview with Antony Bugg-Levine

Nell Edgington — Mon, 05 Dec 2011 16:25:35 +0000

In this month’s Social Velocity blog interview, we’re talking with Antony Bugg-Levine. Antony Bugg-Levine is the CEO of Nonprofit Finance Fund, a national nonprofit and financial intermediary dedicated to mobilizing and deploying capital effectively to build a just and vibrant society. In this role, Mr. Bugg-Levine oversees more than $225 million of capital under management and a national consulting practice, and works with a range of philanthropic, private sector and government partners to develop and implement innovative approaches to financing social change. He is the co-author of the newly released Impact Investing: Transforming How We Make Money While Making a Difference.

You can read past interviews in our Social Innovation Interview Series here.

Nell: You’ve recently taken over the helm of the Nonprofit Finance Fund, a pioneer in cutting-edge ideas for better capitalizing the nonprofit sector, like growth capital. What’s next for NFF? Where do you go from here?

Antony: I am humbled and excited to be given the responsibility to lead an organization with such a strong legacy and talented staff. After 31 years of working with nonprofits and funders, Nonprofit Finance Fund understands as well as anyone how we can best raise and use financial resources to create sustainable organizations that together weave the fabric of just and vibrant communities.

Honing and sharing these insights is more important than ever. As the economic crisis has turned into an intractable employment crisis, the communities we work with and the organizations that serve them are facing unprecedented challenges. Business as usual is no longer going to work. But business-as-unusual is increasingly exciting. The crisis has created new opportunities by shaking loose long-held barriers that kept the worlds of social change and business firmly apart.

NFF is well-poised to help ensure that these new opportunities bear fruit, by doing what we have always done–bringing a data-driven approach to identifying what works, and working deeply and closely with social change organizations while communicating effectively with capital providers. We will have more details on our specific strategic direction in early 2012 but are very excited about the possible directions we can take. In many ways, this is our time and we hope to be worthy of these opportunities.

Nell: You recently wrote a book with Jed Emerson about impact investing that charts the field and where it might be going. But the field of impact investing, especially in places like the Social Capital Markets Conference, seems to separate itself from philanthropy and the nonprofit sector. How can and should impact investing and philanthropy collide and what will make that happen?

Antony: Advocates of impact investing have done a great job in the last few years explaining how for-profit investment can be both a morally legitimate and economically effective tool to address intractable social and environmental challenges.

But many of these challenges have been intractable precisely because neither markets nor governments have figured out how to address them. So impact investors will have to collaborate with philanthropists, nonprofits and governments to create comprehensive solutions when no one piece can work alone. At NFF we are increasingly seeing the power and necessity of a “total capital” approach where, for instance, we provide impact investing capital in the form of loans, human capital in the form of (grant-funded) consulting support, and government assistance in the form of subsidy or loan guarantee. This is particularly important as the unemployment crisis places increased demands on already strained organizations. For example, to support a set of leading arts organizations, we secured a PRI from the Mellon Foundation that enabled us to provide loans alongside technical assistance to leading arts organizations. We are now developing a similar integrated approach to support social service agencies such as homeless shelters and soup kitchens.

Nell: The vast majority of money is still bifurcated with for-profit investing on one side and charitable donations on the other. What will it take to change that and get more capital to social change organizations?

Antony: When I began this work at the Rockefeller Foundation almost five years ago I thought we were in the deal-making and infrastructure building business: that a few compelling examples of how impact investing can work and the development of networks and measurement standards to facilitate collaboration would be enough to allow impact investing to take off. But now I realize how impact investing threatens deeply-held mindsets of a bifurcated worldview that insists the only way to solve social challenges is through charity and the only purpose of investing is to make money.

To overcome this belief will require more than analysis and anecdote. Instead we need to build new systems to support the new aspirations. We need:

a regulatory and legal framework that recognizes and incentivizes the contributions impact investors can make;
educational systems that train young professionals to adapt investment tools to social purpose;
measurement systems that allow us to assess and compare the blended value investments generate;
nonprofit and for-profit social enterprises equipped to navigate the increasingly complicated strategic options that impact investors present; and,
a philanthropic system organized around the question “How can we deploy all our assets to address the social issues we care about?” rather than “How do we give well?”

Nell: What is your idealized financial future for the social change sector? What level and kind of change would you ultimately like to see?

Antony: I envision a day when we organize the social change sector around the problems we seek to solve rather than the tools we happen to hold. Instead of fetishizing the moral or practical supremacy of grant-making or investing, in this world we will recognize that each has a role to play, and they are often most powerful when taken together. Exciting examples are already taking hold. In California, the California Endowment organized a multi-sector coalition to put an end to the “food deserts” that left many poor communities without easy access to purchase healthy food. This collaboration resulted earlier this year in the launch of the FreshWorks Fund that has mobilized grant capital, bank capital, impact investing capital and intellectual capital to bring new grocers into underserved communities. At NFF, we are applying a similar approach in the ArtPlace initiative, which is using arts as an engine for economic development in the US. This initiative has mobilized substantial commitment from private foundations, the US government and commercial banks.

Nell: How much of a panacea for social problems is impact investing? Can double bottom-line investing truly revolutionize how money flows to solving problems? Will it overtake government and philanthropic investment in social problems? And should it?

Antony: Impact investing is not a panacea. We cannot create and sustain a just and vibrant society unless we recognize that many organizations generate social value that cannot be monetized, and instead must be supported through charity and government. But we also must not ignore the vast potential in the trillions of dollars of for-profit investment capital currently lying on the sidelines of the social change agenda.

The global capital markets hold tens of trillions of dollars. Unlocking just one percent for impact investment will bring multiples of the approximately $300 billion in total annual charitable giving in the US. So impact investing can create a huge difference in how quickly or comprehensively we can address those social challenges where lack of money is the main issue.

Impact investing can also be revolutionary by accelerating new discipline in how we identify, assess, and manage our social change agenda. At their best, investors bring a rigor and discipline in allocating scarce resources to their most productive use, where there is a market-based solution. Impact investing will help spur a movement to link social spending to outcomes that a set of organizations can achieve, rather than just the outputs any one organization can deliver. We need to be careful, however, to recognize exactly where these new approaches will work and where simplistic and reductionist thinking will divert resources away from worthy causes or leave behind worthy organizations.

Related posts:

What Social Entrepreneurs Can Teach The Nonprofit Sector

The Future of Financing Impact: An Interview with Kevin Jones

Data and the Future of Philanthropy: An Interview with Lucy Bernholz

10 Great Social Innovation Reads: November

Nell Edgington — Fri, 02 Dec 2011 15:55:47 +0000

November was another great month in the world of social innovation. Here is my pick of the top 10 posts, articles, graphics, and discussions. As always, please add your favorites from the month to the comments. And if you want to see a longer list of what catches my eye, follow me on Twitter @nedgington. You can also read past months’ 10 Great Reads lists here.

Some very interesting reports and predictions on how nonprofits and philanthropy are changing. First, the Philanthropic Ventures Foundation predicts a pretty exciting future for philanthropy. And Blackbaud released a report on what 35 experts think it will take to grow philanthropic giving in the US. And finally the 2011 Nonprofit Almanac is out. The annual report shows the nonprofit sector growing and that giving is back to 2000 levels

DC Central Kitchen founder and nonprofit sector advocate Robert Egger launched a new group called CForward to help nonprofits fight for their rightful place at the political table.

The Washington Post gets into the social innovation business by launching a new “On Giving” section to discuss philanthropy, social entrepreneurship, socially responsible business and much more.

The Nonprofit Finance Fund offers a great worksheet to assess a nonprofit’s strengths and weaknesses in order to link their financial health to their impact. Love it!

HubSpot offers a great infographic on pull vs. push marketing, but I’d argue it applies to fundraising as well.

The Alliance for Global Good is launching a $10 million fund to promote innovation in philanthropy. The new fund will “draw attention to charities that have found new approaches to tough problems and provide money to help them expand their work.”

On the Unsectored blog Jeff Raderstrong encourages us to start asking the right questions about the charitable deduction currently the focus of so much debate.

Always one to tell it like it is, Mario Morino from Venture Philanthropy Partners offers 6 Wrenching Questions Every Board Member Must Answer.

Jim Kucher argues on his blog that there is a bipolar disorder in social entrepreneurship, between the competing, and sometimes conflicting, social and business perspectives.

Tom Tierney, chairman of Bridgespan Group, a nonprofit consultancy, has written a paper, “The Donor-Grantee Trap, about the dangers of the nonprofit starvation cycle. In a recent interview about it, he argues “Nonprofits should be clear about their definition of success, articulate their strategy for achieving success and be up front about what that costs. That includes understanding the organization’s true overhead costs and making a case for funding good overhead.” Amen to that!

Photo Credit: Sim Van Gyseghem

Related posts:

10 Great Social Innovation Reads: July

10 Great Social Innovation Reads: February

10 Great Social Innovation Reads: October