Too Many Nonprofits…Or A Weak Ecosystem?

Greenlights for Nonprofit Success, Austin’s nonprofit management assistance organization, today released the findings of a research study on the number of nonprofits in Central Texas.  The results weren’t surprising: we have more nonprofits (over 6,300) per capita than any other large Texas city and any other city in the Southwest region. And our nonprofits tend to be small: 93% (compared to 89% nationally) have a budget under $1 million, and 89% have a budget under $500,000.  In light of this study, Greenlights offers some good advice about looking towards cooperation, collaboration, and even  mergers given the number of nonprofits that exist and the increasing competition for funding, especially given the current economy.

What is missing from the study, however, is an analysis of the overall social sector in Austin, including philanthropy and other funding mechanisms, other social impact organizations–like social enterprises (creating social impact through market-based activity)– and the role of the public sector in all of this.  We need to take a bigger picture view and understand all of the elements and entities at play in the sector and how these elements could be better supported, analyzed, strengthened and winnowed, if necessary.  We need to take a look, as I explained in an earlier post, at the overall ecosystem for social innovation (ideas that solve existing public challenges). And we need to look at similar cities (like Portland, Seattle, San Francisco, Denver, Pittsburgh) to understand how their social sector is innovating and thriving and what we could learn from them.  The ecosystem for a thriving social innovation sector includes:

• An Engaged Public Sector: A city and/or state-level office for social innovation, similar to the White House Office of Social Innovation that puts public sector focus and resources toward strengthening an innovative social sector.  One-Star Foundation is moving in this direction.
• Larger, Innovative Philanthropy: An increased number of area philanthropists, giving more grants for capacity-building, providing growth capital to scale great ideas, giving seed funding for ideas that have potential, using mission-related investing and program-related investments, working as a group to discuss innovations in philanthropy and share and leverage projects.
• Social Investment: Adding a social element to the entrepreneurial investing that is already rich in our area, investors could create innovative funds that provide nonprofits and social enterprises financial tools such as loan guarantees, quasi-equity deals, and networks, advice, and entrepreneurial knowledge.
• Colleges and Universities Encouraging Research: Our local colleges and universities could launch centers for research on social entrepreneurship and social innovation. The RGK Center is a good start, but I’d love to see more.
• Discussions and Experiments: More events, gatherings, workshops, think tanks and other activities that help social entrepreneurship and innovation take hold in our region.

I think to truly understand where the Austin social sector is and how the number and capacity of nonprofits fit into that, we need to understand the entire ecosystem.  If we want to boast a thriving, innovative social sector we need to take a step back, analyze what we have and what we can do to encourage even more innovation.  The end result is a stronger, healthier city that ties its spirit of entrepreneurship and innovation to its desire to give back and strengthen the communities in which we live.  That is the Austin I envision.

Tags: Austin, Greenlights, nonprofit, One-Star Foundation, Philanthropy, RGK Center, Social Enterprise, Social Entrepreneurship, social innovation, Social Investing, White House Office of Social Innovation

The Benevolent Energy of a New Generation

I participated in the semi-finalist judging this past week of the Dell Social Innovation Competition, run by the University of Texas’s RGK Center for Philanthropy and Community Service.  The competition invites undergraduate and graduate level students from colleges worldwide to submit business or nonprofit venture plans.  The goal of the competition is to encourage and train students to use entrepreneurial practices in the creation of creative solutions to the world’s most entrenched social problems. Through three elimination rounds of competition one winner is chosen to receive $50,000 for their venture. This year over 1,500 students representing 33 countries studying at hundreds of universities around the globe entered their ideas. 

This is the third year of the competition.  Last year’s winner, Husk Power Systems, turns discarded rice husks into energy in India.  The social enterprise is so innovative they even found a way to turn the ash from the burned husks into fertilizer and cement.  Husk Power Systems was named FastCompany’s Social Enterprise of the Year last year.

The judging process culminated last night in our final decision making meeting.  We were charged with narrowing the 75 semi-finalists down to 3 finalists and an alternate. Those finalists will be announced today.  It was in some ways an overwhelming charge; the ideas and energy of the applicants was amazing.

In the process of judging, however, I was struck by two things.  First, it seems that there is something happening in this generation of students.  When I was in graduate school, towards the end of the dot-com era, most student interest and energy was channelled towards technology opportunities.  So many of my classmates were swept up in the  dot-com craze, hoping to become the next multi-millionaire entrepreneur.  Many thought the old notions of profitability, company valuation, business planning were outdated.  Dot-coms were ushering in an entirely new business model that was breaking all the rules.  Obviously that didn’t pan out.

Now it seems a new energy and excitement is sweeping college and graduate school campuses.  But this energy and excitement has a much more benevolent spin to it.  Now  the rage is to create a social enterprise, to become a social enterpreneur.  The Dell competition is one of countless social enterprise competitions across the globe. There are so many problems facing our world from tremendous poverty and disease, to global warming, to inadequate food and energy supplies, to disparate educational opportunities.  The push is no longer to find the next greatest technology in order to make money, but rather to find the next greatest technology in order to save lives or save the planet.  That’s a really interesting switch.  And an exciting, inspiring one.

Which brings me to the second thing that struck me.  Just as there was hubris in the dot-com boom, I can’t help but wonder if there might be just a little hubris in this trend as well.  I don’t want to dampen the energy and excitement of this generation of idealist at all.  I marvel at their resolve to work towards righting so many disequilibriums.  But I do wonder if some of the social enterprises that emerge, not necessarily in this competition, are borne of Americans thinking that they have the answer to what ails other countries.  I think true solutions to the world’s problems have to be envisioned and created locally, that is to say a social entrepreneur needs to spend some serious time living, breathing, researching and listening to the market they are trying to penetrate.  They also need to find significant local partners to suggest, refine and challenge solutions.  Western countries can absolutely offer ideas and certainly resources to make those solutions a reality, but I’d hate to see anyone in this new generation acting like the missionaries of the 19th and 20th centuries bringing “answers” to developing countries.

That’s not to say that any of the plans we reviewed suffered this fate.  Rather, I’m merely offering a caution to the great idealists of this new generation.  By all means, keep the ideas, energy, enthusiasm and initiative coming.  But at the same time, let’s take a step back and make sure that the ventures being created are locally grown and developed.  That is the only way that they will truly be sustainable solutions.

Tags: Dell Social Innovation Competition, FastCompany, Husk Power Systems, RGK Center, social entrepreneurs