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NextGen donors

10 Most Popular Posts of 2013

UnderwoodKeyboardAs 2013 comes to a close, and we all head off for some much deserved rest and relaxation, I wanted to thank all of you wonderful Social Velocity readers. You are an inspiring group of people working tirelessly to make this world a better place. I am very thankful to be able to work and interact with you all through the Social Velocity blog.

Before I take a break from the blog until January, I want to provide a list of the ten most popular Social Velocity blog posts from this year in case you missed some of them. You can also read the 10 Most Popular Posts lists from 2011 and 2012.

I wish you all a peaceful and relaxing holiday season. I look forward to talking and working with you in 2014. Happy Holidays!

The 10 most popular Social Velocity blog posts of 2013 were:

  1. 5 Nonprofit Trends to Watch in 2014
  2. 5 Taboos Nonprofits Must Get Over
  3. Why Your Board Should Raise 10% of Your Nonprofit’s Budget
  4. 5 Reasons Your Nonprofit Isn’t Raising Enough Money
  5. Addressing the Nonprofit Fundraising Elephant in the Room
  6. Find and Keep a Great Fundraiser
  7. 5 Questions to Get Your Board Moving
  8. Getting Real About Nonprofit Overhead Costs
  9. NextGen Donors and the New Golden Age of Philanthropy
  10. The Nonprofit Sector Needs to Get Over the Fear Thing

And if you want to make sure not to miss a single post in 2014, sign up for the Social Velocity e-newsletter (and download a complimentary copy of the Financing Not Fundraising, vol. 1 e-book in the process).

Photo Credit: Wikipedia

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NextGen Family Philanthropy: An Interview with Katherine Lorenz

Family foundations prepare for next generation.In today’s Social Velocity interview, I’m talking with Katherine Lorenz, president of the Cynthia and George Mitchell Foundation. In late 2012, Forbes Magazine named Katherine “One to Watch” as an up-and-coming face in philanthropy. She also serves on the board of directors of the Environmental Defense Fund, the Institute for Philanthropy, Puente a la Salud Comunitaria, and the Association of Small Foundations.

Nell: There is a lot of interest in the next generation of philanthropists—Millennials who stand to inherit the largest wealth transfer in history. How do you think this next generation of philanthropists will be different than their predecessors and why?

Katherine: I do believe this next generation of philanthropists will be different than their predecessors. People tend to become interested in a specific issue or cause based on a personal experience—something that impacts their lives profoundly. It is only natural that this next generation of philanthropists will do their philanthropy differently; they grew up in a world that looked very different than the world their parents and grandparents grew up in. Things like 9/11 and social media were formative experiences for Millennials, so it should not be surprising that they will think differently than previous generations—just as the Great Depression had such an impact on the way their grandparents lived their lives and did their philanthropy.

A recent study by 21/64 and the Johnson Center on Philanthropy about next gen donors showed that this generation is more clearly driven by impact and effectiveness in their philanthropy than generations before them. They also want to be more hands-on in their engagement with an issue or an organization—they want to serve on boards or get involved in a more concrete way than just writing a check. They look at financial resources as only one tool in the toolbox, and seek to bring many other resources at their disposal to create change in the world.

Nell: Do you believe that next gen donors will actually divert more money to organizations that can prove they’ve created social change? Are we going to see the needle move in terms of funneling more money to proven social change efforts under their watch?

Katherine: I am not sure if we will actually see Millennial donors divert more resources to organizations that can prove they are creating social change. While I do believe this generation will ask for more metrics, and want to know the impact they are having more than previous generations, I think this group will also be open to taking more risks as they search for innovative solutions. In taking more risks, there will be more failure but also potential for more significant social change if the risk pays off. In sum, I think next gen donors will risk more and fail more than previous generations, although this should create more innovative methods that address the issues they care about.

Nell: What is your view on how family philanthropy evolves over time? For example, your grandparents’ generation’s understanding of and opinions about climate change are quite different than views about climate change now. How do changing views affect a philanthropic approach over time?

Katherine: I think that family foundations evolve with generational changes more in how they address issues than in what they address. Often a family holds very strong beliefs and values, and those are passed down from generation to generation. For example, my grandfather funded sustainability issues for more than 40 years, primarily funding large institutions or creating new institutions, and trying to bring businesses into the conversation. While climate change was an issue he cared about, the larger picture of how the earth will sustain a growing population with finite resources drove him. Those values and interests are acutely present in his children and grandchildren, although how we do philanthropy to address these issues is slightly different.

With more science available, it is clear that climate change is very clearly the biggest threat to a sustainable planet, and we are using different tools than my grandfather did to address the issue—more grassroots organizations, more policy and advocacy work, and less of a focus on big institutions. Our values around this topic very much came from my grandfather’s passion, but our approach in addressing the issue is quite different. I think a difference in generational approach is common in family foundations.

Nell: How do you think philanthropy could be more effective and better help nonprofits create change? What shifts in the philanthropic landscape are you particularly excited about seeing?

Katherine: I think one of the biggest problems in the non-profit sector stems from the relationship between the donors and their grantees. Donors often ask grantees to do special reporting or won’t pay for overhead expenses or ask them to do something outside of their current strategy. Grantees are often compelled to do these things in order to obtain funding, although sometimes they spend more time trying to please donors than doing the work at hand. Donors have unrealistic expectations of grantees, and non-profit leaders usually spend more time fundraising than working on the issue they were funded to address.

I would really like to see donors and grantees operate more like partners, and less like one is doing a favor for the other in exchange for funding. I would like to see donors fundamentally shift the conversation from a focus on lowering overhead costs to a focus on maximizing social benefit. Who cares if overhead is high if the organization is actually making a dent in the issue they’re trying to solve?

One shift I see in the philanthropy world that excites me is the growing number of groups that exist to help donors be more effective. Donor education is growing in popularity. Inheritors are realizing that doing philanthropy well is a serious job and requires training. As the field of donor education grows and formalizes, I think we will see donors doing a better job of allocating resources for social benefit.

Photo Credit: Cynthia and George Mitchell Foundation

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10 Great Social Innovation Reads: September 2013

10 Great Social Innovation ReadsThere were some really great articles and discussions in the social change space this past month. From new attempts to put philanthropy under the microscope, to analyses of Silicon Valley’s contributions to social change, to the difference between market innovations and social innovations, to Millennial giving, there was a lot to think about.

Below are my picks of the 10 best reads in the world of social innovation in September. But please add what I missed in the comments.

And if you want to see an expanded list of interesting reads, you can follow me on Twitter, Facebook, LinkedIn, or Google+.

The 10 Great Reads lists from past months are here.

  1. Silicon Valley has been getting into the social change game, but some aren’t impressed with their contributions so far. David Henderson takes Silicon Valley to task for focusing their technology “innovations” only on broken nonprofit fundraising models (Google’s announcement in September of a new fundraising app, One Today, is an example of what he’s talking about).  And Charles Kenny and Justin Sandefur seem equally unimpressed arguing that Silicon Valley’s view that technology can end global poverty is “wildly overoptimistic.”

  2. And speaking of social change and business, Daniel Goldberg makes a very interesting (and helpful) distinction between “market innovations” (“an opportunity for profit that also happens to help people…and [is] effective precisely because [it] so cleverly ride[s] the market wave”) and “social innovations” (which “produce value by filling gaps left by the market…a business opportunity in the classic sense, but a systematic market failure that required a social purpose to address”). Much of impact investing, he argues, falls into the first camp, whereas social impact bonds fall into the second.

  3. It is crazy (and terrifying) how the wealth of America is increasingly concentrated in a small group of people at the top. The rate at which it is happening is mind blowing. The 400 richest Americans are worth $2 trillion, which is a $300 billion increase from last year and double what it was a decade ago.  And in 2012 the top 10% of earners brought home more than 50% of the total U.S. income, which is the highest level ever recorded. Kind of depressing, isn’t it?

  4. But there is hope. Clara Miller, formerly head of the Nonprofit Finance Fund and now head of the F.B. Heron Foundation, is one of the leading visionaries in the social finance space. Her recent article is a must read and explains the dangers of nonprofit growth without adequate capital and what funders can do to prevent it.

  5. Paul T. Hogan, VP of the John R. Oishei Foundation, argues that funders should focus on building nonprofit organizations: “The development of the nonprofit organization provides plenty of factors to evaluate and many outcomes to strive for. It can also satisfy the funder’s obligation to effectively steward resources insofar as an organization is being helped to last for the long term and have a much greater chance of effectively achieving its, and therefore the funders’, goals.” Oh, if only more foundation leaders thought that way!

  6. Pablo Eisenberg writes a fairly vehement rant against philanthropy for being an increasingly closed loop. He argues that their insularity “keeps philanthropy from solving serious problems” and that we need “foundations and big donors to realize they don’t have all the answers. Nonprofits should have a greater role in driving the agenda.”

  7. September saw the annual Social Capital Markets Conference and one of the interesting things to come out of it was a new Community Capital Symposium that immediately preceded SoCap this year. CoCap brought non-accredited investors (with a net worth below $1 million) and social entrepreneurs together to talk about community-focused investing. It’s an interesting financial innovation to watch.

  8. Over the month of September, GrantCraft, a project of the Foundation Center, ran a 4-episode podcast series talking about and with Millennial philanthropists as a complement to the Johnson Center NextGen Donor Report about Millennial giving that came out earlier this year. Fascinating stuff.

  9. And then on the tactical side, HubSpot offers some great insight on What Millennials Really Want From Your Nonprofit’s Website.

  10. I always love urban food innovations, perhaps it’s because they are addressing several social problems at the same time (urban decay, obesity, economic decline, environmental degradation). And so I was interested to see that urban rooftop farming is a new trend.

Photo Credit: UWW ResNet

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Will Millennials Shift How Money Flows to Social Change?

millennial givingThere is a lot of talk lately about how the world is changing thanks to the Millennials, the demographic force of people born between 1981 and 2000 who promise to fundamentally change the world as we know it.

And they are already well on their way, from eschewing cars, to corporate jobs, to Facebook, just for a start.

But what I continue to wonder is whether Millennials will fundamentally shift how money flows to social change.

Here are the shifts I wonder if Millennials will help us make:

More Social Change Money
Will a significantly greater amount of money begin flowing to organizations that are working on positive social change? For the past four decades only about 2% of the U.S. Gross Domestic Product has gone to philanthropy. That’s a pretty big trend to buck. Millennials stand to enjoy the largest wealth transfer in America history. Will more of that money flow to philanthropy? Will Millennials be able to move the needle on the 2% and find ways to funnel more money to social change?

More Money Flowing to Proven Impact
Will more money start flowing to organizations that can prove that they have created social change? Traditionally, philanthropy has not been terribly strategic, following emotion rather than data. However, new research claims that Millennial donors are more focused on impact than their predecessors (see the Millennial Impact Report, The Next Generation of American Giving report, and the NextGen Donors report) and are more committed to seeing their money flow to organizations that can prove they are actually accomplishing social change. (Although some argue that Millennials will actually not give any differently than their predecessors did.) So once Millennials become the philanthropic force everyone predicts will they actually invest that money differently?

More Financial Vehicles for Social Change
Will more financial vehicles become available for social change efforts? As Millennials start to control the wealth in this country, will they use new tools like impact investing to funnel more money, beyond just philanthropy, to social change efforts? Will they be able to connect impact investors and philanthropists and their respective pools of money? Will Millennials’ demonstrated interest in social change translate into new ways to fund that social change?

More Delivery Vehicles for Social Change
Millennials, so far, tend to be more entrepreneurial than their predecessors. And at the same time there are more organizational structures, beyond the traditional nonprofit organization, for making social change happen, from B Corps to Lc3s to for-profit social businesses, to social intrapreneurship. But it remains to be seen whether these new structures, and others yet to come, will stand the test of time. And whether Millennials can transform traditional nonprofits to be more entrepreneurial too.

There certainly can be hype around the promise of a generation. But I’m excited to see what the Millennials bring to the world of social change.

Photo Credit: Next Generation of American Giving Report

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NextGen Donors and the New Golden Age of Philanthropy

nextgenreportA new report from the Dorothy A. Johnson Center for Philanthropy and 21/64 gives us the first real glimpse into the minds of the next generation of philanthropists, and it’s fascinating. These are not your father’s philanthropists. Millennial and GenX donors (wealthy individuals, or individuals who will inherit wealth, born between 1964-2000) will control more philanthropic dollars than any previous generation. And more importantly, they think about giving in very different ways than their parents or grandparents did. Which means nonprofits need to pay attention.

This next generation of philanthropists is so critical because it’s estimated that $41 trillion will transfer from the Baby Boom to these next generations in the next 40 years. And since much of this wealth could become philanthropic, some have predicted “a new golden age of philanthropy.”

But it’s not just the unprecedented wealth that makes this new generation of philanthropists so important, it’s the fact that they want to fundamentally change philanthropy. According to the report: “They want to make philanthropy more impactful, more hands on, more networked.”

The key findings from the report are that these NextGen donors are:

  • Focused on Impact. “They see previous generations as more motivated by a desire for recognition or social requirements, while they see themselves as focused on impact, first and foremost.”

  • Giving Based on Values. “They fund many of the same causes that their families support and even give locally, so long as that philanthropy fits with their personal values.”

  • Looking to Be Engaged. “Giving without significant, hands-on engagement feels to them like a hollow investment with little assurance of impact.”

  • Paving Their Own Way. “While they respect their families’ legacies and continue to give to similar causes and in similar ways as their families, they are also eager to revolutionize philanthropy.”

This report is further proof of the major trends changing the nonprofit and philanthropic sectors. Given where the sector is heading, there are three things nonprofit leaders should understand and embrace:

  • Outcomes are here to stay. In order to compete for funding you must be able to prove the results of what you are doing, what change you are creating. NextGen donors are doing their homework and want to understand what impact their dollars will have. To stay relevant, you need to start by creating a theory of change and then figure out how you can being managing to outcomes.

  • Giving has gone social. NextGen donors rely heavily on their social networks to make decisions, including their giving. And they offer their knowledge of worthy causes to their friends as well. So if you aren’t part of the social network you will be left behind. Start to open your organization to become a networked nonprofit and watch your support and influence grow.

  • Donors are more than a checkbook. This next generation of donors doesn’t want to just write a check, have their name on a wall and be done with it. They want to really get to know the causes in which they invest. And the word “invest” is an apt one. These donors want to give money, time, mind-share, networks to things they believe in. And if you can employ that passion and investment effectively you will get so much more than just dollars. So figure out how to engage donors in much deeper, more meaningful ways.

This is a really exciting time for philanthropy and ultimately for the nonprofit sector it funds. But it’s up to nonprofit leaders to understand these fundamental shifts and adapt accordingly.

Photo Credit: www.nextgendonors.org

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