Social Velocity » Convergence

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.

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:

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

Talking About Rethinking Nonprofit Fundraising

Nell Edgington — Tue, 13 Sep 2011 20:12:31 +0000

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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This Week’s The Giving Show

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

Financing Not Fundraising Webinar Series

Here Comes SoCap

Nell Edgington — Wed, 29 Sep 2010 17:18:18 +0000

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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A Voice for Convergence

Nell Edgington — Tue, 19 May 2009 20:17:12 +0000

There is a great new voice in the growing movement towards the convergence of the public, private and nonprofit sectors. Dan Pallotta, author of Uncharitable: How Restraints on Nonprofits Undermine Their Potential, has launched a blog on the Harvard Business site. His first two posts expose the irrational dichotomy under which the American business and nonprofit sectors operate. The private sector enjoys various financial tools, incentives and behaviors that are forbidden to the nonprofit sector. Why do we offer those trying to make a profit every advantage, but make those trying to create a social good suffer hurdle after hurdle?

His first post takes on what he calls the “two rulebooks — one for charity, one for the rest of the economic world.” And he gives various examples of a double standard for charities:

We let the for-profit sector pay competitive wages based on value, but have a visceral reaction to anyone making a great deal of money in charity.
We let Coca-Cola pummel us with advertising, but donors don’t want important causes “wasting” money on paid advertising. So the voices of our great causes are muted.
We let for-profit companies invest in the long-term to identify new sources of revenue, but we want charitable donations spent immediately to help the needy. All results must be measured against expenditures in twelve-month windows, and a 65% return is required.
We aren’t upset when Paramount makes a $200 million movie that flops, but if a charity experiments with a $5 million fundraising event that fails, we call in the attorneys.

Yes! Nonprofits exist within a system that in effect penalizes them for trying to do good. The result is a sorely undercapitalized sector held together by bandaids, desperate for more talent and resources, bracing themselves against the increasing number of problems they are being called on to solve. It is a horribly broken system, which requires a complete resetting.

In his second post, Pallotta takes on the nonprofit executive salaries debate, again with a view towards the double standard nonprofits face: “We give young people horrible mutually exclusive choices. We tell them that they can pursue their dreams of helping the world’s neediest citizens or they can pursue their dreams for their own economic futures, but they cannot pursue both.” The end result is a nonprofit sector that struggles to attract enough of the top talent our country has to offer.

The problems we are facing are too complex and too deep to allow this continued lack of resources for a sector that is trying to find solutions while the for-profit sector pays enormous salaries to those just trying to make a profit:

We must reject the dysfunction that calls a billionaire who spends all his time building his wealth a “philanthropist” but the three-hundred thousandaire who spends 100% of her time trying to end hunger a parasite for her six-figure salary. The notion that people should be compensated on the basis of the value they produce can no longer be denied to those who save lives while it is given freely to those who sell sodas and bounce basketballs.

Some might argue that despite lower salaries Generation Y is entering the nonprofit sector in higher numbers than previous generations, which is great, but that’s not sustainable. If the system doesn’t change, as they get older, buy houses, raise families, many of the best and the brightest of that generation, too, will be lured away by big paychecks and greater resources with which to do their work.

Dan Pallotta provocatively demonstrates the tremendous inconsistencies that exist in a system that unnecessarily drives a wedge between the nonprofit and private sectors. I look forward to more of his posts.

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Change is Here

Nell Edgington — Wed, 25 Feb 2009 19:56:41 +0000

One of the criticisms of an otherwise very well received speech last night by President Obama was that it was “too ambitious.” Last night he vowed to take on healthcare and education reform, the recession, global warming, 2 wars, among other things. That is ambitious, but does he have a choice? Do we have a choice? You could actually argue that it wasn’t ambitious enough.

Our world is changing so quickly and the problems are becoming larger and more complex. This complexity requires, and indeed demands, a completely different, and by previous standards “ambitious,” approach. The very ways in which we live, work, play, communicate are all changing, and exponentially. Take social media and the flood of information it provides; we’re all trying to figure out how to keep up.

Lucy Bernholz, president of Blueprint Research & Design (a philanthropy consulting firm) and a philanthropic thought leader, argued recently that what we are experiencing is not a recession, but a complete restructuring of our world. Our institutions are crumbling, our environmental resources diminishing, our economy melting down. We are charting completely new territory:

It doesn’t make sense to think of this as a dip in an otherwise upward trend. It is more like a turn off onto a different path. People born since 1990, all over the globe, have fundamentally different assumptions than those born before that year about where information lives, who controls it, where and how work gets done, what the “proper” role of government might be, where their friends live, how much personal privacy they have, want or value, what kind of resources will be needed to fuel their futures, what kind of innovation might fuel the economies in which they will live, and what their individual relationships to others – proximal and far away – are, could be, or might be.

And she suggests many ways in which this restructuring could take place. Several on her list point to a growing convergence among public, private and nonprofit approaches (which I’ve talked about before):

Social enterprise begins to morph the philanthropic giving that exists to its left and the commercial enterprise that exists to its right (on a spectrum from giving to investing

Individuals’ daily contributions and activities are a deliberate and recognized mix of paid and unpaid – and successful enterprises build themselves to catalyze those inside/outside, professional/volunteer, expert/amateur, user/producer contributions

Philanthropic giving is really asked (read: required by regulators or purchased: in a marketplace) to prove its value in the funding food chain of producing social good. So are social investing, social enterprise, and socially responsible investing.

Enterprises and activities that generate economic, social and environmental benefits move from marginal to the middle – and innovation shifts elsewhere

We will no longer assume that nonprofit = social good, commercial enterprise = profit, rather we will think about what we need as a society (investigative reporters, an independent media, universal literacy, human rights) and figure out new forms of delivering those things

So financing, once separated into private and nonprofit buckets, merges into a results bucket that combines social impact and financial profit. Problems are no longer addressed from a profit or nonprofit position, but rather from a solution position, which draws on both. Activity that provides a blending of profit and social good is no longer marginalized, but is actually revered and becomes the norm.

What we are already seeing, and will continue to see more and more, is a convergence of private, public and nonprofit money; private and nonprofit operating principles; private, public and nonprofit goals and reasons for being; private, nonprofit and government approaches to problems. We no longer exist in neat categories that inform our activity, funding, thought, approach, world-view.

The social entrepreneurship movement has taken off so dramatically in recent years in large part because of this growing convergence. People are recognizing that the old separations no longer make sense or work.

Convergence is real and is happening everywhere. Those who are not “ambitious” enough and continue to view the world in stale and unbending categories will be left behind.

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The Power of an Accounting Convergence

Nell Edgington — Fri, 20 Feb 2009 17:07:48 +0000

One of the most exciting things happening in recent years is a “convergence” of the three sectors: government, business and nonprofit. Some private businesses now include a social mission in their business model (a solar energy company); nonprofits are using business models to create sustainable organizations; the federal government is thinking about an office of social innovation. The old, separate sectors are being swept aside by a new idea that each sector has something to offer and by combining the social focus of the nonprofit sector; the business acumen, wealth, and innovation of the private sector; and the tremendous resources of the public sector you have a palpable ability to solve the challenges we face.

One area where I think convergence could be particularly powerful is in accounting practices. I’ve talked before about the ideas of adding equity to the nonprofit balance sheet, nonprofits raising growth capital like businesses can, and moving nonprofits towards the for-profit understanding of necessary and justified costs.

All of these ideas demonstrate how currently the nonprofit sector is put at a disadvantage by not having access to powerful financial tools that the for-profit sector is well versed in: growth capital, justified costs, equity. On the flip side, nonprofits are also hindered by strings and restrictions on the money they do receive. Take government grants for example. There was a fascinating New York Times Op-Ed this week by two University of Texas at Austin accounting professors arguing that banks receiving TARP money should be held to the same requirements that nonprofits are when they receive federal aid. They argue that TARP banks should be required to practice “fund accounting,” where a separate set of books is kept for funds given to a specific project or activity, just as nonprofits are.

Any nonprofit accountant, executive director or development director will tell you that fund accounting can be a nightmare. Indeed as the professors point out:

Executives of banks that have received TARP cash have said that it is too hard to account separately for how they spend their federal dollars. Money is fungible, they argue, and therefore they cannot readily distinguish between outlays of their own resources and those provided by the government. But that’s the type of doublespeak that would get the head of a town’s homeless shelter thrown in jail. If bankers are unable to segregate cash by source and specifically account for expenditures, why are they in charge of banks in the first place?

The underlying assumption of nonprofit fund accounting is that nonprofits can’t be trusted to effectively and honestly use the money they have been given. The banks that have received TARP money have already demonstrated their inability to use the money as it was intended, so fund accounting going forward might be the answer.

But what the op-ed unintentionally demonstrates is how crazy the strictures we put on nonprofits are. Why is the assumption that for-profit businesses can be trusted to spend government money correctly, but nonprofits cannot? Does it stem from an assumption that nonprofits tend not to know what they are doing when it comes to the business side of things? Or is it an assumption that nonprofit work must have more safeguards in place?

What ends up happening is that we are weakening the financial position, and thus the productivity, of a key sector. We are limiting the tools at their disposal and making those resources we do give them cumbersome and costly to use.

What underlies this mistrust of the nonprofit sector? And how do we change these rules and structures so that nonprofits are given the capital, without the strings, that will allow them to successfully address issues? We need to move towards a convergence of accounting practices whereby nonprofits are given more of the tools the for-profit sector enjoys and the for-profit sector is called to account in a more meaningful way for the resources they receive.

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Thoughts on Social Innovation

Nell Edgington — Wed, 04 Feb 2009 16:24:31 +0000

The United Way Capital Area recently asked to interview me about social innovation for their blog. It was a lot of fun, and they asked great questions. You can check out the interview here. Or read the text of it below.

Q: Your bio says you’ve been in the social sector for over 13 years. Tell us what things were like for you when you first got involved with the non-profit world. How were they different from today’s imperative to develop entrepreneurial models in the non-profit sector?

A: I don’t know that things were fundamentally all that different when I got started. Nonprofits have always been entrepreneurial, if you think about it. They are created because someone sees a disequilibrium, or “market opportunity” (inadequate schools, poor housing, lack of cultural arts) so they create an organization, with great risk and few resources, to fix that disequilibrium. This is not so different from a business entrepreneur, aside from the social motive versus profit motive.

I think what has changed over the past decade or so is a convergence among the public, private and nonprofit sectors. A decade or so ago the three sectors remained relatively separate. A nonprofit might receive corporate philanthropic dollars or federal dollars, or government might contract with a nonprofit to provide public services, but the three sectors stayed separate and had their own unique characteristics. Now you see a merging of the three sectors into what some call a “fourth sector.” Some private businesses now include a social mission in their business model (a solar energy company), nonprofits are using business models to create sustainable organizations, the federal government is thinking about an office of social innovation. The old, separate sectors are being swept aside by a new idea that each sector has something to offer and by borrowing the best from each we can move towards solving the mounting problems we face.
Q: What is an example of a fundraising lesson you’ve learned during your career that helped you make KLRU’s transformation so successful–either a mistake made, or a surprising success you were able to apply again?

A: When I started at KLRU in 2005 there was a tremendous lack of fundraising infrastructure (technology, staffing, planning), and we needed a significant financial investment to build that infrastructure. But my experience had been that funders weren’t interested in supporting infrastructure. However, my boss several years earlier at the Oregon Children’s Foundation, who was an expert fundraiser, always said that if you can clearly articulate the impact that an investment can make you can convince someone to invest.

Armed with that idea, I created a compelling case for investing in a complete transformation of KLRU’s fundraising function, along with a demonstration of the return on investment an investor would get. This plan to revamp KLRU’s fundraising function (everything from new database software, website, staff, messaging, collateral) was ambitious and expensive for donors who were not used to supporting infrastructure. But because the case was so compelling (their investment would allow KLRU to become more self-sustaining, generate more revenue, spend more time on programming, and spend less money over the long term) we easily secured the money needed. People always talk about the importance of relationships in fundraising. Relationships are definitely important, however, I would say that even more important is a compelling, articulate ask that demonstrates impact and social return on investment. Donors want to make a difference. If you can clearly demonstrate how they will make a significant difference, not in your organization, but in the broader community through your organization, you will gain their investment.

Q: In your recent article, “Social Innovation Provides Hope in the Uncertainty”, you mention an approach that entails “uncovering the root causes of the social problem and addressing those head on with new ideas and models, instead of attempting to ameliorate the symptoms of a social problem”–tell us why such an approach is so important, especially right here and now in Central Texas?

A: Because the problems that we as a city, region and nation face are so large and so complex and the resources available to address them are becoming scarcer. We have to be smarter about how we solve problems; we no longer have the luxury of just addressing the symptoms. That’s not to say that every nonprofit organization must solve problems. There are some problems that unfortunately will probably never be solved completely, for example hunger and homelessness. But, there are many problems where the conversation can change from “How do we serve more people in need?” to “How do we change the system so the need no longer exists?” I don’t suppose to have the answers to the problems facing our region, but what I am arguing is that we examine the issues we are working on and ask hard questions about the root cause of the problems and how we could creatively find solutions. Again, not every problem has a solution, but every problem deserves a critical analysis of the systems and structures feeding it and whether those could be changed. It is sometimes a difficult conversation to have because root cause work involves changing long-held beliefs or entrenched systems, but the end result could be more lives saved in the long run. And I would argue that in some cases investing in solutions, or changed systems, is a far better long-term investment than simply continuing to provide services.

Q: How do you see the non-profit landscape in Central Texas changing or evolving in 2009?

A: The economy will most certainly play a role. It will be harder to find resources, and so organizations will have to get smarter, more efficient and more strategic about fundraising, and that means making an investment up front in planning, messaging, strategy, technology. These don’t have to be large investments, but it can’t just be business as usual. Difficult times call for better strategy. I think nonprofits will have to become more social media and Internet savvy. There are cheaper, better ways to raise money, but you’ve got to be willing to take a risk and make an initial investment. It takes money to make money in the nonprofit world just as in the business world.

I also think there will be larger conversations among the nonprofit and philanthropic communities about our level of investment in the nonprofit sector. Clara Miller, CEO of the Nonprofit Finance Fund, wrote an interesting piece recently about how the nonprofit sector has been sorely undercapitalized for years and is near the breaking point. She argues that we can no longer allow this critical sector to scrape by with band-aid infrastructure. I think there will be a growing realization that we have to invest in the infrastructure and capacity of this sector. We can’t just buy programs, we have to build the organizations that we are relying on to provide our social safety net and solve the many problems facing us. And that means nonprofits have to ask for and funders have to invest in technology, top talent, strategic planning. We can’t bootstrap our critical services any more. If we want our nonprofit sector to survive and thrive and continue to solve problems, we have to make adequate investment there.

Q: What is your take on the importance of collaboration, between government, private and social sector organizations to provide socially innovative solutions?

A: Absolutely critical, and I would go even further to say that the three sectors are not just collaborating, but actually converging, which, as I mentioned earlier, is a really exciting and powerful development. The three sectors have been collaborating for years. What is happening, and where I think the tremendous opportunity lies, is in the convergence of the sectors. By combining the social focus of the nonprofit sector; the business acumen, wealth, and innovation of the private sector; and the tremendous resources of the public sector you have a palpable ability to solve the challenges we face. Take the idea of a federal social innovation fund that is being discussed among the Obama administration and social entrepreneurs. The idea is that the federal government and private investors would pool a significant amount of money that would be invested in social entrepreneurs, along with management assistance similar to what a venture capital fund provides its investments. This social innovation fund would combine the wealth and resources of the government and private sectors to provide adequate growth capital to nonprofits and social businesses. That’s a pretty exciting idea.

We all know that Austin has such an entrepreneurial, innovative private sector, a committed nonprofit sector and a strong government sector. We are ripe for social innovation and for a convergence of the sectors. Other cities similar to Austin, such as Portland, Denver, San Francisco, Seattle, Boston, are heavily involved in social innovation, with venture philanthropy funds, blooming social enterprises, and investors in social businesses. Although Austin has some activity, it is nothing like these other cities. Our city has a tremendous opportunity to benefit from this convergence and face the future with a new economy that combines social and financial profit. I’d love to see that happen here.

Q: Thank you for your time, is there anything else you would like to add?

A: Although I know people are wary and uncertain in this economic climate, I would argue that this is also a time of tremendous opportunity. We all know that the nonprofit sector has been sorely undercapitalized for years, if not decades. We can’t go on like that. We also know that our problems (poverty, inadequate schools, depleted natural resources) are getting worse, not better. Because of this mounting pressure I see lawmakers, philanthropists, nonprofit leaders, CEOs and others standing up and saying enough is enough. We can’t go on like this. Something has got to change. The entire financial system of the nonprofit sector has got to change. We need to invest in infrastructure, we need to create strong, sustainable nonprofit organizations, we need all three sectors to work together, we need to address root causes, and we need to look to others for innovative models. I am very confident that out of this pain and uncertainty our social sector will emerge stronger, better resourced and better equipped to solve the problems we face. Because, in essence, there isn’t another option.

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