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English at Work

8 Nonprofit Inflection Points and How to Seize Them

In the lifecycle of any nonprofit there comes a time when something needs to change. Call it an inflection point, a resetting, a fork in the road. I see it all the time. Someone in the organization takes a step back and realizes something just isn’t going to work anymore. It’s a critical point. It’s the point at which you decide whether you are going to take the leap and make this a year of real change.

When that moment comes, and you feel the urge to really do things differently, don’t shy away from it. Take the leap.

Here are eight of the most common nonprofit inflection points and how Social Velocity can help you seize the opportunity they present:

  1. Board and staff are floundering and don’t know where the organization is going:
  2. Everyone is fed up with fundraising
  3. Your approach to a community problem has become too narrow
  4. Your board is not helping to move the organization forward
  5. You can’t effectively articulate your nonprofit’s value to the community
  6. You need money to strengthen the organization, but don’t know where to look
  7. There is a much greater need for your nonprofit’s programs, but you can’t afford to grow
  8. You’re worn out and need to be inspired

Photo credit: besar_bears

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Echoing Green Call for Social Entrepreneurs

Today Echoing Green launches their annual search for budding social entrepreneurs to invest in. For over 20 years Echoing Green has provided $30 million in seed funding and support to nearly 500 social entrepreneurs – including the founders of Teach For America, City Year, College Summit, and SKS Microfinance, some of the darlings of the social entrepreneurship world.

Echoing Green invests in and supports outstanding emerging social entrepreneurs to launch new organizations that deliver bold, high-impact solutions. Through a two-year fellowship program, they help visionaries develop new solutions to society’s most difficult problems. These social entrepreneurs and their organizations work to solve deeply-rooted social, environmental, economic, and political inequities to ensure equal access and to help all individuals reach their potential.

This year Social Velocity is a search partner for Echoing Green to help them find fellowship applicants. In the Spring of 2011 Echoing Green will award between 12 and 20 fellowships to early-stage social entrepreneurs.  Fellows receive up to $90,000 in seed funding over two years, operational and technical support, and access to a powerful global community of fellows and alumni. The online application opened today and will close on November 12th.

If you think you might qualify, check out their eligibility requirements and assessment criteria and their 2011 Application Handbook.  You can also take a look at some of their past fellows.  They are an impressive, engaging, inspiring group. In fact, one of Social Velocity’s clients, English at Work, is led by Echoing Green Fellow, Maile Broccoli-Hickey. You can read their story here.

The Echoing Green Fellowship is a fabulous opportunity for an aspiring social entrepreneur to not only receive a couple of years of funding and assistance, but also gain a lifetime membership to an elite network of leaders of the social innovation movement. And any past Fellow will tell you that that brings countless opportunities to make things happen.

Good Luck!

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Bringing Small Nonprofits to Scale

English at Work could be a poster child for social innovation in the nonprofit sector. An Echoing Green fellow, founder Maile Broccoli-Hickey is a social entrepreneur, but like most of them, she doesn’t even know it. Her tireless work to build an organization that can effectively and efficiently transform the English language skills of hotel and restaurant workers is a model to other nonprofits who have a great solution, but lack the capacity and strategy to grow it.

Maile started English at Work in 2004 when she was a waitress in an Austin, Texas restaurant. She realized that her co-workers needed customized English language instruction to ensure their and their employers’ success. Why not bring customized English classes to the workplace in a focused and systematic way? These courses, paid for largely by restaurant and hotel owners who see the value in having a more fluent workforce, get dramatic results. English at Work creates greater proficiency and fluency gains in a shorter amount than their closest ESL instruction rivals. The program works so well because it is a win-win. Students become more fluent and successful at work, paving the way for promotions and a way out of poverty. Employers get more productive, loyal and customer-service oriented employees.

But like most nonprofit organizations hit hard by the recession, a year ago English at Work was struggling to make ends meet. Although employers paid for the classes, those fees didn’t cover all organization costs. The additional necessary revenue came from individual donations and foundation grants, both hit hard by the recession. At the same time Maile knew that the program had the potential to transform the lives of so many more people. Despite financial troubles, she had big visions for growth.

With funding from a couple of key donors who understood the value of investing in infrastructure, capacity and planning, Maile enlisted Social Velocity to determine what was holding the organization back and to create a comprehensive revenue plan to get the organization on firm financial footing. Over the first two months of the engagement we interviewed board and staff members and reviewed all organization policies, by-laws, finances, collateral, plans and documents. We then created a detailed analysis of each area of the organization (strategy, program, finances, marketing, staffing, board, etc.) with recommendations in each area for how the organization could be more effective. Once completed, we worked closely with Maile over the next 3 months to create a detailed plan for increasing how money flowed to the organization from individuals, foundations, corporations and earned revenue. Finally, we trained English at Work staff and board on raising money.

Now that English at Work is on much firmer financial ground, they are ready to plan for growth, and so we are in the midst of creating a strategic plan for significant growth of the program. The hope is to take this great solution and bring it to scale.

English at Work is a great example of the many little-known nonprofit organizations that toil away under the radar. They may have a fabulous model for creating real change, but lack the infrastructure, capacity and strategy to grow their impact to scale. Although the Social Innovation Fund and other venture philanthropy funds that exist to bring solutions to scale are great, no ecosystem exists for the smaller nonprofits that may have equally important solutions. But there is a way. By combining a few key donors who understand the bigger picture, a smart strategy for growth and sustainability, and a determination to execute effectively, even the smallest nonprofits with a great solution and a vision for growth can get there.

Photo Credit: English at Work

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Making Donors Organization Builders

English at Work logo 2The “starvation cycle” of nonprofit organizations doing more and more with less and less has to end.  But how can nonprofit organizations break out of this cycle when donors won’t fund nonprofit capacity?

The news last week that the Boston Foundation will shift the majority of their competitive grants to unrestricted operating support, which in reality means capacity building, is fantastic.  The Boston Foundation is one of the few foundations that understands that strengthening nonprofit organizations, through money to support technology, infrastructure, fundraising, top talent, management expertise, strategic planning, evaluation, research and development, is absolutely key to making social change possible.

But the Boston Foundation is just one in a sea of foundations and individual philanthropists who have yet to understand the importance of money to build nonprofit organizations.

But perhaps there is hope.  Social Velocity has helped many nonprofits convince foundations and individual donors, who previously may have only provided direct service funding, to become organization builders.

I have discussed before Social Velocity’s work to help Heart House, an after-school program for at-risk kids in Austin and Dallas, strengthen their plan to grow statewide and create a pitch for growth capital.  Heart House could not pay for this planning work through their operating budget, so they went to a foundation that was already supporting their program and asked them to invest in this growth planning.  When the foundation understood that a small investment in organization building would help this organization that they love improve the lives of even more children, they were happy to invest.

Another example is Social Velocity’s client, English at Work, a nonprofit that teaches ESL classes to the employees of restaurants and hotels.  English at Work is a subsidized social enterprise where the hotels and restaurants pay them a fee to run these classes.  The nonprofit is demonstrating great results and has real potential to replicate the model.  First, however, they need to strengthen their overall revenue function to position them for growth, which is where Social Velocity came in.

But again, English at Work didn’t have the operating revenue to pay for that outside expertise. So they approached a foundation in their fold and made the case for how a strengthened revenue function would put English at Work in a position to start planning for replication. And that replication would mean that their results-achieving model could provide more people with stronger English language skills.  Stronger English language skills mean better, higher paying jobs, less stress on the social safety net and a stronger, healthier community.  And what English at Work helped their donor understand is that to get to that positive outcome, English at Work as an organization has to be more effective.  They have to learn how to create a stronger, more sustainable revenue function that can support a larger organization over the long term.  And figuring that out costs money.

Nonprofit organizations need to start approaching the donors and board members who are already supporting their programs and make the case, in an articulate, reasoned, but passionate way that for more results, they have to invest in organization building.  And they need those closest to the organization to make those investments.  It is a process of educating those nearest and dearest to the organization about the power of a stronger internal organization.  It’s a new conversation, but an important, and potentially game-changing, one.


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Accelerating Austin’s Social Enterprise Conversation

This is RISE week in Austin.  RISE (Relationship and Information Series for Entrepreneurs) was started by the Sosa crew–Roy and Bertrand Sosa (brothers) and Roy’s wife Suzi.  The brothers immigrated from Mexico in 1986 and started a company called NetSpend, selling prepaid credit cards to recent immigrants.  Netspend went on to be very successful, and they sold the company in 2006 to launch MPOWER Ventures, a double-bottom-line venture capital fund whose mission is to empower the world’s underserved, and MPOWER Labs a research and development incubator and business accelerator.

The Sosa’s are firm believers in entrepreneurship and are a testament to its power to transform people and communities.  They launched RISE in 2007 as a way to ensure that “Austin continues to be a leader in developing top level entrepreneurs who transform their vision into successful businesses that greatly contribute to our local, national and global economy.”  They believe that Austin has been and will continue to be uniquely positioned to foster successful entrepreneurs:

There is no better place on earth than Austin, Texas for an entrepreneur to gather the tools they need for success. As a unique intersection of the academic, public and private sectors, our city has proven itself to be an environment for entrepreneurs to succeed. Austin is home to household names such as Whole Foods Market, GSD&M Idea City, A Glimmer of Hope Foundation, Silicon Labs, The Lance Armstrong Foundation and Sweet Leaf Tea.

RISE differs from most entrepreneurial conferences, though, in that it includes a social entrepreneurship track.  The Sosas believe very strongly in social entrepreneurship, as they themselves are social entrepreneurs.  There are many great sessions on the schedule this week from Philip Berber’s (founder of A Glimmer of Hope) session on his journey from entrepreneur to social entrepreneur, to Kala Philo’s session on Muhammed Yunus’ social business model, to Doug Ulman’s (CEO of the Lance Armstrong Foundation) session on social entrepreneurship, and several others.  These sessions have all been standing room only.  It’s really exciting to see such an interest in this topic in Austin.

My colleague Jessica Shortall and I even got in on the game by presenting Startups with Social Impact, an overview of Social Enterprise, which we define as “An organization (business or nonprofit) that achieves significant social impact as a product of market-based activity.”  And then broke it down into three types, which is our modification of Venturesome‘s 3 Models of Social Enterprise:

  • Subsidized: Business activity operated by a nonprofit–profits are funneled back into nonprofit
  • Trade-off: Business balances between the level of profitability & the creation of social impact. An increase in one decreases the other.
  • Lock-step/Social Business: Direct social impact increases or decreases in parallel with financial returns.

Social Enterprise can be viewed along a spectrum like the one below, where potential for profit starts at the first Trade-Off model:

Then, two great Austin examples of social enterprise spoke to the standing-room-only group.  First, Missy Nathan, co-founder of Blue Avocado discussed how their green grocery bag system has taken off in just 4 short months through Wholefoods and other distribution channels.  Their Lock-Step business model has a triple bottom-line:  profit, environmental and social return.  They even give 1% of sales to Kiva.  Their supply chain is diligently monitored to ensure that they are environmentally sound, and they closely track and report on the number of plastic bags being reduced.  This team of three smart, tenacious women has huge goals and appears prepared to deliver on them.

Our second social enterprise was English at Work, a nonprofit that teaches English at the workplace to Spanish-speaking company employees.  Founder Maile Broccoli-Hickey discussed their unique business model which charges their company clients (large hotels, restaurants and other employers) to provide on-site English language classes to their employees.  Although they are currently charging the companies only 25% of the costs of the class, the goal is to move closer to 50% and beyond.

The session ended with a vigorous discussion of what is holding Austin back from becoming a leading social enterprise city.  Some thoughts included:

  • Lack of capital–investors don’t understand or aren’t familiar with double-bottomline companies, so are unwilling to invest
  • Low media interest in/attention to social enterprise
  • Few events that bring together social entrepreneurs and investors
  • Unclear understanding of the current social enterprise eco-system, and what is lacking compared to other thriving cities like San Francisco, London, Toronto, Pittsburgh

Some suggested the first step may be a wiki that lays out the current social enterprise ecosystem.  Once we understand what we have and where we are, we can determine what it will take to evolve.  Also, many are excited about the possibility of Brewster McCracken becoming our next mayor.  He has expressed a real interest in this area, especially as it pertains to the green economy.

There are many more sessions on tap for today and tomorrow and many more conversations to come.  But the energy and excitement for social enterprise is palpable.  I hope to see it grow.

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Wednesday, March 4th, 2009 Social Enterprise 2 Comments

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