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Convergence

Who Should I Interview Next?

Robert EggersI’ve been doing the monthly Social Velocity Blog Interview for 2 1/2 years now and have talked with more than thirty inspiring leaders in the world of social innovation. But now I need your help.

Over the last few years, I’ve interviewed

And many, many more.

It’s been amazing to hear from these leaders about where we’re going in the world of social change and where they hope to take us. You can see all of the past interviews here.

But now I’d like your ideas for who I should interview next. What all of these interviewees have in common is that they are people who are pushing boundaries, asking hard questions, creating new realities, making real social change. Who’s next?

So help me add to the list. If you have a suggestion for who I should interview next, leave a comment below or email me at info@socialvelocity.net. Thanks for your help!

 

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Is Your Nonprofit Ready for Change?

I believe very strongly that in order to fix a broken nonprofit sector we must change how things are done. But it is not enough to change only the larger structures of the nonprofit sector (IRS regulations, public perceptions about “overhead expenses,” funder requirements). Individual nonprofit organizations must also change how they operate in order to survive in this dramatically changing environment.

At Social Velocity, the nonprofits I provide consulting to have all reached some sort of inflection point. They have realized, for whatever reason, that they can no longer continue on the way that they always have. They have decided they must revamp their financial model, restructure their board, dramatically grow their services, or chart a new strategic direction in order to stay relevant and achieve their missions.

But it’s not enough to want change, or for just a couple of people within a nonprofit organization to want it. Over the many years I have been working with nonprofits, I have realized that in order for change to really happen, there must be some key building blocks in place:

  • A Champion. There must be someone in a leadership position in a nonprofit who is a cheerleader for change. It could be the executive director, the board chair, or a board member. And that person must have the respect and trust of a majority of the organization. If the champion for change is a sidelined board member, an executive director on their way out, or a disgruntled staff member, the effort for change will go nowhere.

  • A Need for Change. The champion for change must be able to describe the need for change. There has to be some urgency and a described end goal in order to rally others to the cause for change. It may be that a major funding source is going away, or board members are resigning, or client need is dramatically increasing. The champion for change must make a case to the rest of the organization about why change must happen, and why now.

  • Critical Mass. Once a key champion starts pushing for change they must rally enough board and staff members behind the idea. There must be enough people who also want to see significant change in the organization in order to force it out of inertia.

  • Funders of Change. A nonprofit could have an entire board and staff ready and willing to change, but without at least a few funders who also believe in that change and are willing to invest in a process for making it a reality (a new financial plan, a growth plan, a board recruitment process) they won’t get very far. You need to identify a few funders who love what your nonprofit does and can be made to understand the need for change now.

  • A Navigator. I’m probably biased, but I believe that you need someone to guide the organization through significant change so that it doesn’t collapse in the middle. Without an outsider who understands the change that needs to happen and how to lead the organization there, a nonprofit can easily fall back into their normal ways of doing things. If a nonprofit is really committed to making a serious change, then they need to invest in a competent guide to get them there.

The convergence of the public, private and nonprofit sectors, an economic restructuring, and increasing competition for dollars, among other things, have combined to make change in the nonprofit sector a necessity. Those nonprofits that realize that business as usual just won’t cut it anymore and begin the work of changing their organizations to meet these new challenges are the ones that will survive and thrive.

To find out more about how I help nonprofits navigate change, check out my consulting services.

Photo Credit: Best and Worst Ever

 

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The Power of a Theory of Change

Last week I spoke at the Women’s Collective Giving Network (WCGN) national conference about the power of a theory of change. The WCGN is an affiliation of women’s philanthropic groups across the country. The members pool their money and give grants to nonprofit organizations. It is critically important that they, along with every nonprofit organization, understand and embrace the power of a theory of change.

With increasing competition for social change dollars it is absolutely crucial that nonprofit organizations develop their own theory of change. A theory of change is basically an argument for why a nonprofit organization exists. It describes how an organization uses community resources (money, volunteers, clients) to perform a set of activities which result in changes to the clients’ lives (outcomes) and changes to broader communities, institutions, or systems (impact).

Essentially a theory of change describes how a nonprofit creates social change.

So a very basic theory of change for a literacy program would look like this:

 

It used to be enough for a nonprofit to talk about what they produced (or outputs), such as meals served in a soup kitchen, hours spent reading to a child, beds provided in a homeless shelter, but that just doesn’t cut it anymore. In a world where there are fewer and fewer dollars and more and more nonprofits fighting for those dollars, philanthropists, government funders and others are increasingly asking the question “To What End?” So what if you created outputs, did anything really change because of your work? Did the lives of those in your program change and did our community change?

That’s where a theory of change comes in. If you can articulate what change you hope your organization is creating, then with that fundamental building block in place you can:

  • Chart a strategic direction
  • Prove your results
  • Secure more support for your organization

And ultimately achieve the holy grail of the nonprofit sector: sustainable community change.

A theory of change is the fundamental building block that makes all of this happen, like this:

A theory of change is so fundamental because you cannot chart a strategic direction if you don’t know what you are trying to change. And you can’t prove that you’ve changed something unless you have articulated what it is that you want to change. And you certainly can’t get funders, volunteers, and key decision makers to support you if you can’t tell them what you are trying to change and whether you are actually doing it. So the only way to truly create long-term social change is to start with a theory of change. Which is why I encourage every nonprofit organization to go through the exercise.

If you need help crafting your own theory of change, check out our Creating a Theory of Change step-by-step guide, or if you need customized help to chart a strategic direction, check out our Strategic Planning consulting services.

Photo Credit: Kristymp

 

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Creating UnSectored Social Innovation: An Interview with Jeff Raderstrong

In this month’s Social Velocity blog interview, we’re talking with Jeff Raderstrong, founder and editor of UnSectored, an online platform for people interested in developing collaborative efforts to create social change. In addition to the online platform, the UnSectored community uses offline events and activities to identify intersections, facilitate discussions, encourage cross-sector collaboration, and promote cross-sector change efforts. Jeff is also a community engagement consultant and has worked for Venture Philanthropy Partners, among other organizations on the front lines of social innovation.

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

Nell: You and some friends started the UnSectored blog a year ago to encourage the nonprofit, public and private sectors to break down their walls and work together on social change. How has it worked so far? What are you seeing?

Jeff: The blog was a first step in changing the conversation around social change to focus not on individual components—social enterprise, nonprofit, corporation social responsibility, government innovation, etc—but to consider the entire ecosystem. Social change is a complex task and, to us, it seemed silly to have all these conversations separately, with people not really paying attention to what those with similar (or identical) goals were doing.

In that way, the blog has been successful in providing that space. The response we received was way more positive than we were expecting, because our core message is a pretty simple one—that social change is the responsibility of all individuals, organizations, and sectors, and that everyone should work together. But there had not been a place for discussion around that idea, so it resonated with people.

There’s still a lot more work to do, obviously, and UnSectored can’t do all of it. We are providing the platform for the community that believes in this idea—what’s next is up to the people who join that community.

Nell: Your fellow bloggers at UnSectored are all part of the Millennial generation. Do you think the notion of “unsectoredness” (is that a word?) is a particularly Millennial one?

Jeff: Answer to first question: Yes! You just put it on the internet, so it’s now a word!

Second question: I do not think there is anything inherent about the ideas behind UnSectored that make it explicitly a millennial endeavor. The work on UnSectored has been done primarily by millennials, but I think that’s just a function of the people I reached out to (my peers) rather than who the idea resonates with most. We have gotten response on this from people of all ages and backgrounds—I think it’s a universal idea.

That being said, I do think it’s a relatively new idea, born out of the more collaborative and connected nature of the brave new world we live in. The new tools available to people make it much more easier now than ever before to work together. For millennials, this isn’t “new,” this is the way we were raised. Because of that, we get it a little quicker than others, but I don’t think that makes it “ours” at all.

Nell: In addition to the blog you are also doing UnSectored Talks and Working Group Actions. What are these and what are you hoping they will accomplish?

Jeff: We have four components to UnSectored: Blog, Talks, Actions, Campaigns. The blog is relatively straightforward, as are the Talks: Both are ways to engage with open and intentional conversations around social change. The Talks are offline, the blog is online.

The other two components are trying to leverage the power of the UnSectored community to move from discussion to action. The Actions are the offline, coordinated version of this, and the Campaigns leverage the online platform of UnSectored. By giving people the option to engage in discussion and action, both online and offline, we hope to meet people where they are and get them to engage the best they can.

Nell: How geographic is your movement? Is it growing beyond the D.C. Metro area?

Jeff: It’s centered on DC, but we’ve been talking to people around the country. Because we aren’t funded and rely on volunteer time, it’s hard for us to have events in other places. But, we are looking for creative ways to partner with other organizations around the country. If you have some ideas, let us know!

Nell: Many of your fellow bloggers work for high-profile organizations within the social sector space (Venture Philanthropy Partners, Calvert Foundation, Council on Foundations, etc.). Do you find that your employers buy into the UnSectored idea and if so what are they doing to make it a reality?

Jeff: They definitely do. I think we all get inspiration for UnSectored from our other work. More and more, people at all types of organizations—high profile or not—are beginning to see how working together can produce better outcomes and create more transformative change. Personally, I’ve worked on the Social Innovation Fund initiative from the Obama administration, a great example of “unsectoredness” at work: The federal government partnering with funders and service providers to better leverage resources and encourage innovation. This initiative, which many of your readers are probably familiar with, is a great example of UnSectored’s core principle: That by working together, we can do much more than working alone.

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Real Innovation in Social Change Lies in Reinvention

I’m excited to announce that I have a new post up at the Chronicle of Philanthropy’s Mission:Innovation blog. It is reprinted below. The Chronicle’s Mission:Innovation blog is one of my favorites and was launched last year. Nicole Wallace, a senior writer at the Chronicle, manages the blog, which “reports on nonprofits that are taking bold, new approaches to the way they work, explores what charities can learn from other disciplines, and provides advice from experts on how organizations can better foster new ideas.”

I’m honored to contribute to the blog. Here is the article:

“Innovation” has become such a buzzword lately, particularly among people working on social change. But let’s take a step back and talk about what the word could really mean. Innovation is more than just new ideas. To me, it means taking a completely new approach to how we finance, structure, and prove social change.

The nonprofit world has never lacked new ideas to address problems. In fact, you could argue that nonprofits are innately entrepreneurial, being borne out of a recognized market failing and a new idea to remedy it.

The need, then, is not more new ideas. Rather, true innovation lies in reinventing a field built on social change.

Here are some ways that is starting to happen:

New support mechanisms. The avenues for sending money to social-change efforts are increasing significantly. What started 10 years ago with venture philanthropy has now expanded into nonprofit campaigns to raise growth capital, foundation loans and other investments in organizations, social-impact bonds, and investments that seek both financial and social returns. And that creates an opportunity for social-change efforts to be much more flexible and (we hope) successful, because access to enough and the right kind of money can often make or break a great idea.

A converging economy. We used to suffer from pretty strict delineations among the public (government), private (business), and nonprofit sectors, but that is changing. True innovation is happening where those lines blur—like businesses that make a profit solving social problems. Or governments developing new mechanisms to finance and evaluate nonprofit efforts, such as the Department of Justice’s Pay for Success program.

Proof of social change. Nonprofits used to be viewed as benevolent charities that received donations to support their good work. That’s not enough anymore. Nonprofit donors and social investors are increasingly demanding a social return on investment—proof that the organization is making a difference—in exchange for their money. And nonprofits are now competing not only with other nonprofits but also with for-profit social entrepreneurs. So nonprofits can no longer focus on how many children they’ve read to, meals they’ve served, or animals they’ve saved. They must track and prove how they have changed lives, changed systems, or changed communities.

Although these innovations are encouraging, there is room for so much more. What if:

  • The best and the brightest of Generation Y worked to remake existing organizations from the inside out instead of just starting their own social-change groups?
  • The social-capital market that’s emerging to provide financial vehicles for budding social businesses also included support for social entrepreneurs in the nonprofit world?
  • Venture-philanthropy funds (growth capital for nonprofits) shared investor prospects with social-venture funds (growth capital for social businesses) and vice versa?
  • All nonprofits interested in growth and with a proven model for success had access to enough capital and management expertise to expand?
  • A nonprofit that solves social problems received as many resources and as much respect and attention as a business that solves a consumer need?

These things require sweeping, fundamental changes to the current structures of the nonprofit, government, and private sectors. To me, that’s real innovation.

Photo Credit: mademoiselle lavender

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

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.

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Talking About Rethinking Nonprofit Fundraising

Last Thursday I was a guest on Michael Chatman’s The Giving Show, a weekly radio show about philanthropy. I was delighted to talk with Michael and his listeners about how nonprofits need to rethink the ways they bring money in the door. If you missed the show, you can still listen to the podcast here.

Michael and I talk about:

  • How nonprofits need to finance, not fundraise for, their social impact
  • The difference between revenue and capital, and why it’s such an important distinction for nonprofits
  • When earned income is right for a nonprofit
  • The opportunity the recession poses for nonprofits
  • Why nonprofits must let go of the status quo
  • How to educate donors to be organization builders
  • Where innovation is happening in the nonprofit sector
  • The convergence of the nonprofit, for-profit and government sectors
  • Why overhead is NOT a dirty word

And much more. You can listen here.

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Here Comes SoCap

So it’s my favorite time of year again, well at least in the world of social innovation. The Social Capital Markets Conference in San Francisco starts Monday. There are a lot of social innovation conferences, in fact you can read a great rundown on many of this Fall’s best. But SoCap is by far my favorite. It is the one place where the disparate array of people who are interested in how to get more money flowing to social impact come together for 3 days. There are nonprofit, for-profit and hybrid social entrepreneurs; philanthropists; social investors; government bureaucrats and anyone in between. It seems this conference more than any other is a microcosm of the convergence that is happening in the world of social innovation between the public, private and government sectors.

I’ll be honest, the first two years of the conference were a little heavy on the for-profit social entrepreneurship side, leaving somewhat behind government and nonprofit. There were sessions and speakers from those worlds, to be sure, but the emphasis of the conference in the beginning was how to get money flowing more readily to double bottom-line businesses (for-profit businesses that are making money AND creating a social impact).

This year’s conference promises to open wide the doors of the social capital market. For starters, SoCap organizers have developed 6 “tracks” that each focus on a particular area of the social capital market. The track that interests me the most, of course, is the one focusing on nonprofit/philanthropy. Sean Stannard-Stockton of Tactical Philanthropy has put together a nice track with cutting-edge topics in the world of making money work better in the nonprofit sector:

  • Decriminalizing Fundraising
  • Scaling Social Impact
  • Individual Donors Practicing Unconstrained Philanthropy
  • The Lessons of Behavioral Finance
  • When to Invest and When to Give
  • Nonprofit Analysis: Beyond Metrics

In addition there are several other tracks that hold great appeal: Impact Investing, New Money, Metrics and System Thinking and so on. And then there are some fabulous speakers including Jacqueline Novogratz from Acumen Fund, Matt Flannery from Kiva, speakers from the Gates Foundation and Root Capital and many others. Add to that the side sessions, pitch events and more, and my head starts to spin. Three days is just not enough.

I’ll be blogging from the conference as I did last year (you can read my blogs from SoCap09 here, here and here).

What I love so much about SoCap is that it really challenges this burgeoning community/movement/space to do more, to ask harder questions, to push the momentum forward. You come out of a session with many more questions than you had going in. But also, so much more energy to break out of the normal way of thinking and envision a different path forward. Because at its essence, SoCap is about creating something completely new. It’s about creating a space where money and social impact meet and create a synergy that can, we hope, change the world. The old rules and constraints don’t apply. This conference and all the people attending it, in person or via social media networks, are writing the new rule book. And that’s exciting, challenging, exhausting and exhilarating all at the same time.

If you are attending SoCap too, let me know. See you there!

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