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Paul Brest

10 Great Social Innovation Reads: December 2013

Town2In my eyes, December was about three main things: the After the Leap conference about moving nonprofits to manage to outcomes, predictions about how the social sector will evolve in 2014, and the impact of the second annual Giving Tuesday. Added to the mix were some demonstrations of the growing wealth inequality (a prediction for 2014 from many) and a dash of controversy about the beloved TED Talks. It all made for a very interesting month.

Below are my picks of the 10 best reads in the world of social innovation in December. But please add to the list in the comments.And if you want to see more of what catches my eye, follow me on Twitter, Facebook, LinkedIn, or Google+.

You can also find the list of past months’ 10 Great Reads here.

  1. I already linked to several people’s great 2014 prediction pieces in my 5 Nonprofit Trends to Watch in 2014 post, but Tom Watson’s Trends and Collisions That Will Challenge the Social Sector in 2014 in Forbes is particularly thought-provoking. He takes what he calls a “meta approach” by analyzing themes from big social sector thinkers and “adding a few morsels to the stew.”

  2. One of the predictions on both my and Tom’s list was that the growing wealth inequality will become increasingly obvious. Robert Reich helps this trend by providing a scathing critique of modern philanthropy, arguing that it is becoming less about solving wealth inequality and more about reinforcing it: “Fancy museums and elite schools…aren’t really charities…They’re often investments in the life-styles the wealthy already enjoy and want their children to have as well.” And Peter Capelli, writing on the Harvard Business Review blog, seems to agree, but on the corporate side. He takes issue with “companies that pay poverty-level wages or thereabouts to their employees [while] spend[ing] a good deal of effort to be good corporate citizens in other areas.”

  3. Some people claim the second annual Giving Tuesday was a great success with a 90% increase in day-of online donations over last year, but others, like Michael Rosen, argue that Giving Tuesday is not actually channeling new money to the sector.

  4. The first-ever After the Leap conference in December promoted nonprofit performance management. Perhaps the high point of the conference was Nancy Roob’s (head of the Edna McConnell Clark Foundation) stirring keynote pushing both foundations to fund outcomes management and nonprofits to demand it. The Stanford Social Innovation Review did a great interview with her where she makes many of the same points, and an interview with Mario Morino, the main organizer of the conference.

  5. Writing in The Guardian, Paula Goldman from Omidyar Network discusses how, with impact investing, the blending of social and profit motives is really starting to take hold: “Fifteen years from now…We’ll look back on a host of innovations benefitting millions of disadvantaged people – in education, in healthcare,…in solar lighting—and will have a hard time remembering the day when people viewed charity and business as working towards opposite goals.”

  6. Leon Neyfakh writes a fascinating expose in the Boston Globe about donor advised funds, which he claims is “where charity goes to wait.” $45 billion—more than the endowment of the Bill and Melinda Gates Foundation – currently sits idle in donor advised funds and that amount is growing fast. A huge financial opportunity for the sector.

  7. The Center for Effective Philanthropy released a new study about how much impact foundation CEOs think their philanthropy has had. Philanthropy heavyweights Paul Brest and Lucy Bernholz each give their take on the study’s findings.

  8. I have loved writer Steven Pressfield since I read his fabulous The War of Art last summer. His blog about the creative process is a fount of knowledge and inspiration. His post in December about envisioning and embracing the future in your industry applies to nonprofits too.

  9. The idea of networked approaches to social change has been around for several years and is gaining momentum. Writing in the Nonprofit Quarterly, Mark Leach and Laurie Mazur describe “the power and promise of networked approaches to social change…creat[ing] a force larger than the sum of their parts.” Definitely a trend to watch.

  10. And finally, I love it when someone steps back and asks some hard questions about something that everyone else assumes is amazing. Benjamin Bratton does just that about the beloved TED Talks, which he claims “dumb-down the future.”

Photo Credit: Imperial War Museums

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10 Great Social Innovation Reads: August 2013

relaxed_reading_by_ouzo_portokali-d2zbw08It becomes increasingly obvious to me the longer I am in this space that philanthropy must change just as much, if not more, than nonprofits. And perhaps change is on the horizon, particularly with some key debates happening in the philanthropic world lately.

The biggest of which this month was the showdown between Bill Schambra and Paul Brest (among others) about whether philanthropy should be “strategic.” Add to that the on-going discussion Peter Buffett started last month about philanthropy as “conscience laundering,” and the growing drum beat against the nonprofit overhead ratio, and August was a mind-opening (I hope) month in the world of social innovation.

Below is my list of the 10 best reads in the world of social innovation in August. But please add to the list in the comments.

And you can see an expanded list by following me on Twitter, Facebook, LinkedIn, or Google+.

As always, the 10 Great Reads lists from past months are here.

  1. First up, Crystal Hayling offers some great advice for new philanthropists, but I would say her advice translates to experienced philanthropists as well. If we want to get better at solving social problems, we have to raise the bar on philanthropy.

  2. The big debate this month was about how “strategic” philanthropy should be, whether the best philanthropy comes from a community or scientific approach. Bill Schambra, from the Hudson Institute, and Hewlett folk Paul Brest and Larry Kramer went back and forth and back, and of course others chimed in. For me, the most thoughtful response was from  Scott Walter. It was an interesting debate, but I think at the end of the day they are saying roughly the same thing, with which I heartily agree, philanthropy has to get better at actually solving problems.

  3. As I mentioned last month, Peter Buffett wrote a highly provocative rant against philanthropy in July. And this month the debate raged on with some very interesting counterpoints from nonprofit leader Dan Cardinali here and from Nandita Batheja on the Idealist blog here. Buffett’s piece is certainly doing what any good writing should, provoking people to question their assumptions and think in new ways, even if they don’t fully agree.

  4. Adding to his growing opus, Bill Shore again argues that nonprofits must get bolder in their social change goals. This time Darell Hammond from KaBOOM! and Amy Celep from Community Wealth Partners join in.  But Phil Buchanan at the Center for Effective Philathropy doesn’t heartily agree.

  5. More and more data points to the fact that women are becoming a major philanthropic force. It will be interesting to see how they change the face of philanthropy as we know it.

  6. It’s always important to get a different perspective, and Brian Mittendorf at the Counting Charity blog provides a really interesting counterpoint analysis to recent concerns about the Clinton Foundation’s financial management.

  7. I have to admit it, I LOVE a good contrarian, and Arik Hesseldahl is one this month with his great post suggesting that there may be too much hype around Big Data (the idea that the enormous amount of data now available could yield tremendous improvements to the world as we know it). Although he is talking about Big Data’s promise for business and government, there is an equal amount of hype around what Big Data can do to solve social problems. As with everything, there is no magic bullet, so we would do well to understand Big Data’s limitations.

  8. There is much work to be done bringing the “old” world of philanthropy together with the “new” world of impact investing, so I love to see the two at work together, like Nonprofit Finance Fund’s new project helping the Maine Community Foundation launch an impact investing program.

  9. And then there was something completely different. If we are to ensure that the next generation cares as much, if not more, about fixing social issues, we must raise compassionate children, which gets harder to do in an increasingly segmented society. Perla Ni offers 5 ways to Raise a Compassionate Child In the Age of Entitlement.

  10. And lest we forget why we do this social change work, April Greene from Idealist reminds us.

Photo credit: ouzo-portokali

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Overcoming the Anti-Overhead Mindset

As I described in previous posts here, here and here, one of the ways in which the nonprofit sector is broken is that it is undercapitalized.  It is not able to generate an adequate amount of capital in order to scale and solve the problems it seeks to address.

This undercapitalization comes not from a lack of program-related fundraising, funds that go directly to the services being created, but rather from a lack of infrastructure or administrative capital.  The distinction is between funds raised to BUY services versus funds raised to BUILD organizations.  The latter is very hard to come by in our current state.  Donors and foundations tend to shy away from funding “administrative” or “overhead” costs.  And many nonprofit rating systems reward nonprofits that keep their administrative and fundraising costs as low as possible.  The end goal seems to be nonprofit organizations who plow 100% of their revenue into their programs, with no infrastructure (staffing, fundraising, technology, buildings, accounting, planning, training, professional development) to make the programs successful.

Paul Brest, president of The William and Flora Hewlett Foundation, recently wrote an attack on the notion that administrative costs in the nonprofit sector are somehow unnecessary or unworthy.  As he points out, the end goal of any organization (profit or nonprofit) is to optimize costs, not minimize them.  Costs are appropriate and necessary when they increase an organization’s ability to achieve its mission, or, in other words, provide a net increase to the impact the organization is creating.  Costs in and of themselves are not bad.  Rather, those costs that contribute to an organization being more effective and reaching more people are actually very good.  He argues that in the for profit sector the idea of necessary and justified costs is well understood and that the same principles should be applied to the nonprofit sector:

To use an example from the business sector, assume that a widget manufacturer’s only mission is to make a profit for its owners. Then, an additional administrative expense of 1¢ is justified if it is likely to produce an additional 2¢ of profit. The underlying idea is not different for nonprofits. Their missions are to achieve particular social, environmental, educational, religious, health, etc. goals. And an incremental expense is justified to the extent it has the potential to increase the organization’s net social value.

It is a simple concept, but one that nonprofits and the philanthropists who fund them are only beginning to discuss.  The assumption that nonprofits have to be as cheap as possible, no matter the other “costs” (inefficiency, fewer people served, diminished impact), is outdated. It is a holdover from a time when the nonprofit sector was referred to as “charity,” and philanthropy as “benevolence.”  It was our duty to ameliorate the symptoms of social problems (feed the hungry, clothe the needy, provide shelter to the homeless).  But now we are all realizing that that isn’t enough.  We have to resolve the underlying issues that are causing these problems and that requires whole systems and infrastructure to change.  And for that kind of change to happen it requires well-thought out plans, technology, top talent, clear understanding and management of our financial resources, and significant capital.

I believe this discussion is all part of a growing sophistication in the sector.  Nonprofit leaders are no longer content to scrape by with hopelessly inadequate resources, and philanthropists are beginning to realize that the very principles that created their own wealth need to be applied to the sector which they are trying to support.

I’m glad to see that these conversations are beginning and that people like Paul Brest are leading them.  But the discussions need to move beyond the blogs and journals and into the boardrooms of the nonprofits, foundations, and businesses that are working to solve the very issues the social sector was set up to address.

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Monday, February 2nd, 2009 growth capital, Nonprofits, Philanthropy 3 Comments