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Paul Carttar

The Tricky Work of Scaling Nonprofits

Social Impact ExchangeThe idea of “scale,” or growing to a point at which you are solving the underlying social problem, is a tricky one in the nonprofit sector and something that is a growing topic of conversation.

Jeff Bradach from The Bridgespan Group launched a new 8-week blog series on the Stanford Social Innovation Review blog last month about what he calls “Transformative Scale.”

Bradach asked leaders and thinkers in the scale movement – like Risa Lavizzo-Mourey from the Robert Wood Johnson Foundation, Billy Shore from Share Our Strength, Wendy Kopp from Teach for All, and Nancy Lublin from Do Something – to contribute their insights to the series. Bradach is doing this because he believes we have not yet figured out how to grow solutions to a point at which they are actually solving problems. As he wrote in his kick-off post to the series:

Over the past couple of decades, leaders have developed a growing catalog of programs and practices that have real evidence of effectiveness. And they’ve demonstrated the ability to successfully replicate these to multiple cities, states, even nations in some cases, reaching thousands or even millions of those in need. Despite all this progress, today even the most impressive programs and field-based practices rarely reach more than a tiny fraction of the population in need. So we find ourselves at a crossroads. We have seen a burst of program innovation over the past two decades; we now need an equivalent burst of innovation in strategies for scaling.

One of the places where scale has been an on-going topic of conversation is the annual Social Impact Exchange’s Conference on Scaling Impact. Now in its fifth year, this conference next month in New York City brings together “funders, advisors and leaders to share knowledge, learn about co-funding opportunities and develop a community to help scale top initiatives and build the field.” The conference is organized, in part, by the Growth Philanthropy Network, which “is creating a philanthropic capital marketplace that provides funding and management assistance to help exceptional nonprofits scale-up regionally and nationally.”

I’m excited to be attending this year’s conference and participating in a panel called “Business Models for Sustainability at Scale.” From my perspective, one of the biggest hurdles to scale is a financial one. Very few nonprofits have yet figured out how to create a sustainable financial model, let alone how to create one at scale. And this hurdle exists for many reasons, including: lack of sufficient capital in the sector, lack of sufficient management and financial acumen among nonprofit leaders, an unwillingness among funders to recognize the full costs of operation. So I’m excited to be part of this important conversation about how we can actually create financially sustainable scale.

It will be interesting to see how the conversations at the Scaling Impact conference – led by rockstars in the field like Antony Bugg-Levine from the Nonprofit Finance Fund; Tonya Allen from the Skillman Foundation; Heather McLeod Grant, author of Forces for Good; Paul Carttar from The Bridgespan Group; and Amy Celep from Community Wealth Partners – will relate to the perspectives of those writing in the “Transformative Scale” blog series. I wonder where there will be overlap and where there will be disagreement or even controversy. Scale is an incredibly difficult nut to crack. And as Bradach rightly states, no one has figured it out yet.

I will be posting to the blog during the conference about what I’m hearing and where there are common threads or separate camps.

I hope to see you there!

Image Credit: Social Impact Exchange

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10 Great Social Innovation Reads: September 2012

September was an amazing month in the world of social innovation. There were so many great articles and conversations that I really had a hard time narrowing down to 10 great reads. My original list was 50+.

I know we are all busy and keeping up with the chatter grows increasingly difficult, but this month provided some really thoughtful, long-form pieces that are well worth the read. I think change happens in fits and starts and this month was perhaps about taking a step back and contemplating where we’ve been and where we’re going. And I love it when writers force that kind of reflection.

Below are my top 10 picks for what was worth reading in September in the world of social innovation. But please add what I missed to the comments. And if you want to see an expanded list, follow me on Twitter, Facebook, LinkedIn or Pinterest.

You can see the 10 Great Reads lists from past months here.

Here is my pick of September’s 10 Great Reads in Social Innovation:

  1. In a beautiful New York Times op-ed titled When Capitalists Cared, Hedrick Smith describes a time in the first half of the last century when the American economy was a “virtuous circle of growth, [where] well-paid workers generated consumer demand that in turn promoted business expansion and hiring.” How did we move away from that?

  2. The Echoing Green blog showcases the many social innovations remaking Detroit, once a city on life support. This is an amazing transformation story where social innovation becomes an urban development savior. So exciting!

  3. I’m a huge proponent of the connection between strategy and outcomes, so I loved Arshad Merchant’s description of how Boston-based nonprofit Bottom Line dramatically improved student outcomes by taking a more strategic approach to their work.

  4. The Nonprofit Tech 2.0 Blog gives a great roundup of recent studies and reports about nonprofits, philanthropy and technology.

  5. Mashable highlights a very innovative campaign by UNICEF on social media network Pinterest. It really makes you think about social media, and nonprofit marketing in general, in a new way.

  6. Writing on the PhilanTopic blog, Derrick Feldman describes 8 trends and how they will affect fundraising. From crowdfunding, to one-click technologies, to Yelp and beyond he blows traditional fundraising out of the water.

  7. Social Innovation Fund Director Paul Carttar left his post in September, but social innovation is still very much a focus at the White House, given the White House Forum on Philanthropy Innovation.

  8. There was a bit of controversy in September about whether board members should be forced to raise money for their nonprofits. Kate Barr of Minnesota’s Nonprofits Assistance Fund argued that not all board members should fundraise. But a new study from the Nonprofit Research Collaborative found that nonprofits with active fundraising boards are more likely to meet their goals.

  9. And for those of you who struggle to recruit great board members, LinkedIn launched Board Connect, which looks amazing. Geri Stengel describes how to make it work.

  10. In a very thoughtful post on the Forbes blog, Tom Watson compares and connects two important September events in the world of social innovation: the Clinton Global Initiative and the Giving Pledge reaching 90+ members.

Photo Credit: x1klima

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Next Generation of High Engagagement Philanthropy: An Interview with Carol Thompson Cole

In this month’s Social Velocity blog interview, we’re talking with Carol Thompson Cole. Carol is President & CEO of Venture Philanthropy Partners (VPP), a philanthropic investment organization (co-founded by Mario Morino) that helps great leaders build strong, high-performing nonprofit institutions. She has over thirty years of management experience in the public, private, and nonprofit sectors. She served as Special Advisor to President Clinton on the District of Columbia and was the Vice President for Government and Environmental Affairs at RJR Nabisco.

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

Nell: This year marks Venture Philanthropy Partners’ 10 year anniversary. And in fact, venture philanthropy itself is only a little bit older. How has the concept of venture philanthropy changed since it first came on the scene?

Carol: People began talking about “venture philanthropy” about 11-12 years ago. Back then, it meant many different things, depending on who was speaking. Today, it still means many different things, but those organizations that work within this philanthropic mindset, like Venture Philanthropy Partners, have learned some important lessons along the way and share some common characteristics like a focus on performance, long-term financial commitments, investing in capacity and building infrastructure, and bringing resources in addition to capital to the table, to name a few.

At VPP, we actually moved away from using the term “venture philanthropy” a number of years ago as we realized that our approach was not a strictly “venture” approach. We are much more about blending some of the ways private equity firms approach their financial investments with many of the lessons learned and techniques developed by philanthropists through the years. We usually call ourselves a “philanthropic investment organization,” and we work to maximize all available resources, including capital, time, the skills and experience of our team, and the power of our network, to improve the lives of low-income children and youth in the National Capital Region.

Venture philanthropy arose out of the tech boom in the late 1990s, when many young entrepreneurs making their fortunes online decided to shift their resources into philanthropy. They saw a real opportunity to apply their business and management knowledge to nonprofits to create real, sustainable change for our society. These entrepreneurs decided to take the principles of venture capital that helped them become successful and shift that over into philanthropy.

Of course, the main strategies of venture philanthropy have been used, in some form or another, by grantmakers long before the late 90s. Venture philanthropists focus on high-engagement approaches to their grants, work to build capacity of organizations to scale their programs, and seek measured and proven outcomes as a result of their investment. Above all else, venture philanthropists use high-engagement techniques to bring more than just money to their partnership with nonprofits. Different grantmakers have refined their own ways of implementing these strategies, but they remain at the core of venture philanthropy, even a decade later.

Nell: When venture philanthropy started in the late 1990s it was thought to be a true innovation that could transform the nonprofit and philanthropic sectors. Has it lived up to those original ideas?

Carol: Venture philanthropy is a true innovation, but the nonprofit and philanthropic sectors are large and complicated systems. Venture philanthropy is an effective tool that has helped us deliver strong results for the children and youth in the National Capital Region. VPP is focused on identifying outstanding nonprofit leaders with strong programs and bold ambitions to grow. We give them growth capital to build their infrastructure and scale their organizations through serving more children and youth, by increasing their outcomes and impact, or through influence – making systemic change that ultimately allows for many more lives to be changed. Our first fund has grown to serve an additional 16,000 youth.

Clearly, venture philanthropy has worked for us, but it is not the only answer for the nonprofit sector. It can be a useful tool to deliver results, but creating those results is more important than the way those results are created.

Nell: Venture philanthropy was in many ways the precursor to what has now become the social innovation movement. How do you think venture philanthropy fits into these new worlds of social investing, for-profit social entrepreneurship, and other areas where the public, private and nonprofit sectors are converging?

Carol: Again, venture philanthropy is a tool to be deployed in grantmaking. At VPP, we are focused on bringing a high-engagement model to our nonprofit partners and delivering results for the children and youth of the region. Social investing, social entrepreneurship, and other innovations coming out of the convergence of sectors are examples of similar tools to drive results. At the Harvard Social Enterprise Conference in March, where I spoke along side Paul Carttar of the Social Innovation Fund, there was a lot of discussion about what type of organizational structure is best to create social change and what type of funding an organization should seek out to achieve its mission. What became clear is that people need to focus on goals and strategy, not methods. Venture philanthropy complements programmatic sources of funding because it can help some organizations scale very effectively to help those who need it.

Nell: The federal government took a step into the world of social innovation last year with the Social Innovation Fund, which was based largely on the venture philanthropy model. What do you think of the SIF and how do you see government’s role (at both the local and federal levels) evolving from this?

Carol: VPP is a member of the inaugural portfolio of the Social Innovation Fund, and we are honored to be included among the other intermediary funders. We applied to SIF because the challenges in our community are too big and complex to be met by a single funder, a single nonprofit, or a single sector. What we need now is a “network” of nonprofits, funders, corporations, local governments, and the federal government working together to solve our most intractable problems.

SIF represents the first step towards that new form of collaboration. Speaking at the Harvard conference, Paul Carttar said that SIF was about much more than money, and it would be a success if the public-private partnership model was adopted by others across the country. In these lean times for funding, it is important that we work together to encourage social innovation where it is needed. SIF, as well as the other public-private innovations launched by the Obama administration, like Investing in Innovation and Race to the Top, are developments that should be encouraged. If we can continue to push local and federal government to take on this role as collaborator, we will be able to achieve much higher levels of impact in our communities.

Even the largest philanthropic investments are dwarfed by public funding and are often deeply effected by availability of public funding as well as how and when it is allocated. Not every partnership needs to be as formal as SIF, but I would urge all philanthropic and nonprofit organizations to look for ways to seek alignment with local, state, and federal government efforts.

Nell: What’s next for venture philanthropy? Where does it go from here? How do you continue to reinvigorate or adapt the model?

Carol: I strongly believe that SIF represents the next step for VPP, and for all of venture philanthropy. We feel our model of philanthropy works and our first investments were successful, but we also feel like there is potential to dramatically improve the lives of the most vulnerable children and youth in our regions through intense and intentional collaboration. Because of this, we applied to SIF.

Our SIF initiative, youthCONNECT, represents the next phase of our work. Instead of single investments, we are investing in a network of high-performing nonprofits that provide a number of different services to young people from low-income families to help them thrive in adulthood. All the nonprofits in the network share the goal of bringing education, job training, and social services to at least 20,000 low-income youth, ages 14-24, in our region over 5 years. As we demonstrate success, this approach can be replicated or adapted by others around the region and the country. We will still make high-impact, long-term investments in single organizations, but we are exploring the transformative power of a network approach.

It is too early to tell the effectiveness of youthCONNECT and SIF, but I think these developments are pushing us into the next generation of high-engagement philanthropy. At VPP, we are committed to evaluation, sharing, and transparency so we can learn from each other as we work in these unexplored areas.

Nell: One of the criticisms of venture philanthropy is that it is only accessible to the largest and most successful of nonprofits. Do you see smaller nonprofits being able to access the ideas of growth capital? And if so, how will this evolve?

Carol: VPP focuses on organizations with strong leaders that deliver results. We have historically focused on organizations with budgets of $3-$50 million, but in our youthCONNECT initiative we have invested in organizations that fall below that monetary requirement but still have a proven track record in the area. Investing in smaller organizations is a different approach than some venture philanthropists have used, but these smaller nonprofits should have opportunities to access growth capital. What is most important to VPP is that an organization, regardless of size, can deliver lasting and meaningful results for children and youth in our region. Change in the lives of those who need it most will always remain our priority.

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Will the Social Innovation Fund Really Change the Nonprofit Market?

Last week a new head of the federal Social Innovation Fund, the $50 million public/private fund to scale innovative nonprofits that came out of the Serve America Act, was named. Paul Carttar brings a wealth of experience and knowledge having worked at New Profit, the first venture philanthropy fund, and Bridgespan and Monitor consulting groups, the largest and most sophisticated consulting firms to large nonprofits. He knows how to scale proven nonprofit models.

But we need to be cautious about how much the Social Innovation Fund can do to transform the nonprofit capital market. While it will provide mezzanine funding to the best nonprofits, there are still some glaring holes in the capital available to the rest of the nonprofit sector. You can read my post “Will the Social Innovation Fund Really Change the Nonprofit Market?” at the Change.org blog.


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