Today we celebrate President’s Day and one of our greatest presidents, Abraham Lincoln. We were reminded of Lincoln’s incredible leadership, wisdom and courage to make real change this past Fall when the movie Lincoln came out. The movie chronicles a very specific period in history when Lincoln led an unpopular effort to pass the 13th amendment to the constitution outlawing slavery. His decision to force the end of slavery as the Civil War was drawing to a close was not a political one, in fact it was politically very unwise. Yet he believed deeply that it was the right action at the right time for our country.
In this clip from the movie he talks about Euclid’s ideas about geometric equality as a metaphor for human equality and the need for the end of slavery.
As a true leader, Lincoln did what was right, not what was easy. If you haven’t seen the movie, I highly recommend it. It demonstrates what true social change leadership looks like. Lincoln had a passionate vision for change and had the courage, strength and tenacity to bring it to fruition. He is a model for us all.
I’m excited to report that a week from today, July 26th, I will be participating in a live online chat at the Foundation Center’s Grant Space website, titled “Are You a Social Entrepreneur?“.
Abby Chroman, leader of global community curation for AshokaHub, and I will be fielding questions from the audience about social entrepreneurship, social change, nonprofit innovation, capacity capital, social return on investment and much more.
Some of the questions we’ll be discussing include:
- What qualities do social entrepreneurs possess?
- How is this concept different from traditional corporate structure, even one with a socially-minded mission?
- How do you truly accomplish social change vs. simply doing “good” work?
- How can nonprofits especially incorporate some of this thinking to be successful in fulfilling their missions?
- How do you measure social impact and return?
But the majority of questions are up to the audience. This live chat will happen entirely in the chat window on the Grant Space website. When the chat goes live, you can submit your questions and comments and interact with Abby and me and other readers, but you can also send questions ahead of time.
So join us! Registration is free at the Grant Space web site here. I look forward to your questions!
Photo Credit: Colin_K
I just registered for this year’s Social Capital Markets Conference held in San Francisco in October. It is my favorite conference in the social innovation space for a number of reasons, and I think this year’s conference (the third) may just be even better.
The Social Capital Markets Conference brings together social entrepreneurs (both for-profit and nonprofit, although the latter have gotten less airtime in past years) and those who invest, or would like to, in them. Last year it really felt as if the conference and the incredibly talented and visionary people attending it were at the beginning of something pretty amazing, new ways of providing sufficient capital to social solutions.
This year promises to go much broader and deeper exploring the financial tools and vehicles that social entrepreneurs need and how we create them. For starters, Sean Stannard-Stockton of Tactical Philanthropy is addressing the conference’s tendency in past years to downplay nonprofits and philanthropy at the conference by leading a new “Tactical Philanthropy Track” that will, as Sean has said:
Bring more donors and nonprofits to the “social capital markets table.” To that end, we’re building a series of panel sessions that examine the way in which philanthropy is an integrated part of the social capital markets, not a separate activity. Our sessions will give donors, nonprofits, investors and for-profits the opportunity to examine together the role that philanthropy plays in social capital markets.
Secondly, representatives from the Bill and Melinda Gates Foundation will be at the conference to discuss their decision to put $400 million behind their new Program Related Investments program, which I’ve discussed before as a watershed for the social capital market. The SoCap conference website explains what the Gates session will do:
Gates foundation will discuss the foundation’s PRI initiative including the rationale for charitable investment, the value of investment partners to leverage expertise and capital, and the foundation’s hopes for philanthropy in the social capital market. Remarks will be followed by a deep dive into their experience putting this PRI approach to work with Root Capital.
The Gates Foundation decision to put 1% of their capital into a fund to provide risk capital to social entrepreneurs has the potential to encourage other foundations to similarly experiment with new tools for investing in social entrepreneurs, which ultimately means more dollars in the social capital market.
It’s exciting to see what started three years ago as a small conference of less than 600 (a number achieved only at the last minute by a deluge of laid off investment bankers from the financial collapse) becoming arguably the most important conference in the social innovation space. I hope to see you there!
It seems that social entrepreneurship has come to mainstream America, at least mainstream television. ABC recently launched a new show that provides an on-the-ground look at what a social entrepreneur experiences as they work towards big change.
Jamie Oliver’s Food Revolution which airs Friday nights on ABC is a fascinating look at one social entrepreneur’s journey to “create a food fight that could change a country.” Formerly The Naked Chef, Jamie Oliver has in recent years become obsessed with changing the way people eat. He started in his home country of England convincing the government there to completely revamp their public school food program, doing away with processed foods in favor of healthier, more natural meals for their children.
Now he’s come to America, specifically Huntington, West Virginia, determined by the Centers for Disease Control to be the most unhealthy city in America, to revolutionize how that city eats. His goal is to alter the current trend of high rates of obesity, diabetes, untimely deaths. He is starting with the school system and along the way waging big fights with the school cooks, the local radio DJ and many other disbelievers.
I find two things fascinating about this show. First, it gives viewers a clear understanding of the drama, the ups and downs, the process of building support for the change a social entrepreneur seeks. As David Bornstein put it:
An important social change frequently begins with a single entrepreneurial author: one obsessive individual who sees a problem and envisions a new solution, who takes the initiative to act on that vision, who gathers resources and builds organizations to protect and market that vision, who provides the energy and sustained focus to overcome the inevitable resistance, and who – decade after decade – keeps improving, strengthening, and broadening that vision until what was once a marginal idea has become a new norm.
The social entrepreneur is the person who continuously fights through the resistance, the hurdles, the blank stares, the vehement objections until what was once crazy, becomes obvious.
Jamie Oliver is this social entrepreneur. He has a huge vision and a methodical plan for bringing that vision to reality. He wants to change the way America eats. And he’s starting with one school in one city in America, slowly building support for his new vision. He finds a group of high school kids who all have personal experience with the dangers of unhealthy eating and forms them into a group of evangelists building support for change among their peers, their relatives, and eventually leaders of the community.
Each week we see the struggles that a social entrepreneur encounters when they are trying to move people, communities, institutions toward big change. It is a thankless struggle, but typical of the social entrepreneur, the pitfalls energize, instead of demoralize, Jamie. With each setback he is more and more determined that he is on the right path.
The second thing that is interesting to me is that a social entrepreneur is being chronicled in the main-stream media. The idea that someone with a big plan for solving a big problem makes it to prime-time television is really exciting. We’ll see if the ratings, and thus the profit margin, hold up enough to keep it in the mainstream. I’m hoping so.
So, if you want to see a social entrepreneur on the front lines and be inspired by their vision, commitment, passion and ability to build momentum around an idea, check out Jamie Oliver’s Food Revolution on ABC tonight.
The financial market collapse of the last year has given the emerging social capital markets, where social impact and money converge, a voice and credibility. Indeed some social investments, like those in the microfinance arena, have actually far outperformed the financial returns of the traditional capital markets in the past year.
Will it last? And will money begin to flow more readily to organizations and projects that promise a social return? Will, as some at SoCap forecasted (or perhaps hoped), impact investing become a significant part of a normal investor portfolio in the next five years? Will social impact become a necessary and prevalent part of the traditional capital marketplace? Who knows. This whole space is evolving, and it is much too soon to understand how it will all play out.
One thing, however, that was lacking in last week’s conversations, and is worth a larger discussion, is how nonprofits, those organizations that have been creating “social impact” since before it was cool, fit into this emerging market. As I mentioned in earlier post, attendees to the session I moderated, “Growth Capital for Nonprofit Social Entrepreneurs,” appeared hungry for information, tools, advice, insight about how their organizations could play in this emerging space.
If you think of the overall market as a continuum with traditional charities on one end and traditional businesses on the other, the social capital marketplace, then, is everything in between. It most certainly includes social businesses–businesses that not only make a profit, but also contribute some sort of social impact (like wind farms or organic groceries). And there are emerging investment vehicles that can provide investors a financial return (sometimes equivalent to a traditional market rate return) in addition to a social impact return.
But the social capital market must also include new financial vehicles for nonprofit organizations. In order to effectively provide the public goods that for profit businesses (both traditional and social businesses) can’t or won’t provide, nonprofit organizations require seed funding, growth capital, capacity capital, loans, equity, grants, operating revenue and so on.
Although there was some discussion of these financial needs, the nonprofit side of the social capital market discussion was not as prevalent last week. And indeed some at the conference, including conference co-f0under, Kevin Jones, refer to nonprofits as “our cousins” in this space. Indeed, the keynoter at the first SoCap conference last year encouraged the audience to “set aside” nonprofit organizations because they were not what that conference was about. And I have had a few conversations with leaders in the social business space who have told me: “Innovation will never come from the nonprofit side. It must come from the social business side.”
But nonprofit organizations are very much part of this conversation and this emerging market. Social impact is not a new thing. As much as those of us assembled at SoCap last week would like to believe that we are pioneers in all things, we are not. Many of the financial vehicles emerging in this new space are exciting and new. But creating social impact through entrepreneurial efforts is not new.
Nonprofit organizations have been around for a long time. And their reason for being has always been to create some sort of public good that was not addressed by the market. That is not to say that it has been done right. Many would agree that the nonprofit sector and the philanthropy that funds it are dysfunctional, even broken. And I think most of us would agree the government sector is fairly broken as well.
But we cannot discount and dismiss either sector. In the true spirit of the social innovation space, we must recycle and reuse the nonprofit and government sectors, just as we are refashioning the private sector. We must reconfigure the assets of all three sectors to turn them into more effective, more productive, higher functioning sectors that can work with, not separate from, each other to create solutions.
What does that look like? It means that venture philanthropy funds are sharing investor prospects with social venture funds and vice versa. It means that investors interested in a social return have portfolios that include not only social businesses, but also nonprofit deals. It means that foundations are investing in both for profit and nonprofit social impact organizations. It means that the SoCap conference list of attendees and speakers come equally from all three sectors (public, private, nonprofit). It means that the majority of nonprofit organizations that have an interest in and capacity for growth have access to growth capital and management expertise to scale. It means that a nonprofit that is solving social problems is just as sexy and gets just as many resources, respect and mind-share as a social business that is doing the same. It means that those working on changing laws to help social entrepreneurs look at both for profit and nonprofit structures, incentives and restrictions.
The creation of the social capital market is a bold, chaotic, possibly insane, but potentially game-changing endeavor that has the power to completely rework how money flows through the market to shape society. Let’s not get bogged down in dichotomies and factions, rather let’s take a bigger picture view of the essence of what we are attempting to do. And that is to completely reconfigure, and create a productive convergence among, the three sectors. Now that would be innovative.
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.
Today marks the much-anticipated inauguration of our next President. And to a country in the middle of two wars and a deepening recession, it is a moment of hope. There is much speculation about what this new President will do for our country. Particularly in the nonprofit sector, which always bears the brunt of any economic downturn, there is much anticipation about what tomorrow will bring for the sector. As we watch the ceremony and festivities today, here are some thoughts about what the new administration might mean for the social sector.
Obama made many plans and promises about national service and social innovation during his campaign. I wrote about that here. Basically his ideas were:
- Growth of current national service programs like AmeriCorps and the Peace Corps
- $4,000 tax credits to college students in exchange for 100 hours of community service
- Expanded programs for engaging retirees in community service
- 50 hours of required community service from middle and high school students each year
- Expansion of YouthBuild
- Allocation of 25% of college work study funds to community service projects
And, indeed, many of these ideas are contained in the economic stimulus package currently in front of Congress. The Chronicle of Philanthropy gives a great summary of the implications of that plan on the nonprofit sector. But in essence, the plan includes:
- $200 million to expand AmeriCorps by 16,000 members
- $50 million to the National Endowment for the Arts for grants to arts groups
- $50 million to Youth Build USA, a social entrepreneurial organization putting low-income young people to work building affordable housing. You can see a video clip about this organization here.
- $87 billion to temporarily increase the federal portion of Medicaid
- $2.1 billion to Head Start to serve 110,000 additional children and create 50,000 jobs
- $1 billion for Community Services Block Grants, and $1 billion for Community Development Block Grants which help states provide social services and housing to low-income residents
- $1 billion for Child Care and Development Block Grants
- $1 billion to the Low-Income Home Energy Assistance Program
- $1 billion to help community health centers renovate their facilities, and $500-million to help them provide care to uninsured and underinsured patients
- $120 million to the Community Service Employment for Older Americans program, which would allow charities and other groups to add 24,000 participants
- $100 million to the Compassion Capital Fund, which provides grants to religious and other charities to provide social services
However, these changes don’t go as far as many in the sector would like. A coalition of several social entreprenurial groups, including America Forward, America’s Promise Alliance, Be the Change, and Citizen Schools, are urging Obama to create a “nonprofit stimulus package.” The package would include a Social Investment Fund Network, a government and private venture philanthropy fund that invests growth capital in social entrepreneurs.
But before Obama has even been inaugurated, he has made a grand gesture towards the sector. Yesterday Colin Powell, founder of America’s Promise Alliance, lead Obama’s Renew America Together Initiative where unprecedented numbers of Americans spent MLK Day doing volunteer service. Obama has pledged to make service a key part of his plan for getting America back on track.
This is an historic, exciting time.
Photo courtesy of CNN.
Social entrepreneurial organization YouthBuild rebuilds lives and communities by helping disadvantaged youth work toward a high school diploma or GED while they build affordable housing for their community. They are simultaneously solving two problems facing communities across the country: poverty and homelessness in an innovative way. And they’ve seen great results. In the 14 years they’ve been in operation, YouthBuild has worked with 76,000 kids to build 17,000 housing units in 226 of the country’s poorest communities. And they have grand growth plans. They want 50,000 youth enrolled in their program each year. It’s an impressive story. Watch this Skoll Foundation Uncommon Heroes video about them:
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