10 Great Social Innovation Reads: February

February was another great month in the world of social innovation reading. As I mentioned last month, I’ve started a new monthly series on the Social Velocity blog highlighting my favorite 10 reads in the world of social innovation over the past month. You can read the January list here.

There are many more than 10 great reads out there, but these were the ones that really challenged me and got me thinking. I hope they do for you as well. As always, please add to the list in the comments. I’d love to hear what got you thinking this past month.

1. Seedbeds for Social Innovation: The Echoing Green blog discusses a new Carnegie Mellon University report that details what it takes for a city to be a seedbed for social innovation.




2. Nonprofits need to stop begging for scraps From the Chronicle of Philanthropy’s Money and Mission blog, authored by the Nonprofit Finance Fund, comes a great response to the Stanford Social Innovation Review article a couple of years ago about the nonprofit starvation cycle. This post discusses what nonprofits can do to break out of the cycle.




3. A 10 Year Lesson in How Not To Spend $200 Million The Northwest Area Foundation in Minnesota has declared it’s ten year philanthropic experiment a failure. An interesting study in the less talked about side of innovation (failure) and transparency.




4. Social Impact Bond Learning Group The Nonprofit Finance Fund has launched a learning and discussion group to explore the feasibility of social impact bonds (government bond funding for social impact organizations tied to outcomes) in the US. The UK has already experimented with similar kinds of bonds. If the US introduced these kinds of bonds it could be a revolutionary new tool for funding social innovation.




5. Wired and Shrewd, Young Egyptians Guide Revolt A fascinating look from the New York Times into the structure and tactics of the small group of young innovators who brought Egypt’s ruling dictator to his knees. A real study in social innovation.




6. To Collaborate or Compete? From New Philanthropy Capital comes a report studying when it makes sense for nonprofits to collaborate and when to compete. Such a framework could be a really helpful way to tackle to this burning question.




7. Q&A With Middle East Entrepreneur Habib Haddad And another view of what happened in Egypt, a fascinating interview with a young entrepreneur who discusses the role of social media in the uprising.




8. Stop Giving Donors What You Think They Want: Dan Pallotta challenges nonprofits to treat donors like adults and be upfront and honest with them.




9. Rethinking the State of the Sector: The Deep Social Impact blog encourages the nonprofit and philanthropic sectors to focus on assets instead of challenges.




10. Governmental “Crowding Out” in Philanthropy: Sean Stannard-Stockton argues that because of the arcane way nonprofit accounting is done, money from government sources might actually cripple the financial sustainability of a nonprofit.

Tags: donors, nonprofit begging, nonprofit collaborate or compete, nonprofit financial sustainability, philanthropic transparency, Philanthropy, social entrepreneurs, social innovation

What Social Value Do Nonprofits Really Create?

I have a new post up at the Change.org Social Entrepreneurship blog called “What Social Value Do Nonprofits Really Create?” Here is an excerpt:

There is a concept that good entrepreneurs know only too well, but nonprofits could stand to explore. A “value proposition” is the unique value a product or service provides a consumer. Without a value proposition a business has no place in the market. For a nonprofit, a social value proposition is just as critical to success, but often ignored. In an increasingly competitive marketplace, due in part to the growth of for-profit social entrepreneurs, nonprofits must analyze, articulate, and deliver on a social value proposition.

In the past, nonprofits could exist without a value proposition. Donors wouldn’t argue that a library, homeless shelter, food pantry or school provided a necessary service. But as we move further down the road of social innovation, the assumption that money will automatically follow good works is no longer valid…

You can read the entire post here.

Tags: nonprofit, social entrepreneurs, social value proposition

Social Innovation Comes to Texas with a Bang

As I wrote in an earlier post, I have been part of an exciting new project that is bringing social innovation to Texas.  The Texas Social Innovation Initiative is a partnership between Dallas Social Venture Partners, the OneStar Foundation, and Root Cause in Boston to help seven innovative Dallas-area nonprofits prepare a pitch for growth capital to social investors.

Social Velocity has been one of three consulting teams working with these seven nonprofit organizations to create a compelling growth capital pitch. I have been working with Big Brothers Big Sisters of North Texas helping them prepare a compelling pitch to grow their one-to-one mentoring program for children of imprisoned parents.  I’ve also been working with H.I.S. Bridge Builders to grow their education and employment training program in the poorest parts of Dallas.  Both organizations have demonstrated an ability to change lives in critical ways, they just needed help articulating their work, their results and their plans for growth to an audience of savvy social investors.

Both nonprofits will join five other nonprofit organizations to present their growth pitches to an audience of 300+ potential investors on June 10th. The pitch stage will be the featured component of a day-long showcase of social innovation, called the bigBANG!, at Union Station in Dallas.

The bigBANG! will bring together social investors, philanthropists, social entrepreneurs, nonprofit leaders and others who are interested in connecting money and social change in Texas. The day will feature a socially conscious marketplace, profiles of lessons learned by social entrepreneurs, the fast pitch stage and much more.

But the best part is that this momentum around social innovation in Texas doesn’t have to end on June 10th. OneStar is currently looking for funding to take this project around the state, giving many more innovative nonprofits the opportunity to seek growth capital for their proven solutions. I am so excited to see momentum around social innovation growing in Texas.  It just makes sense that this great big state with a commitment to social issues, a strong entrepreneurial spirit and plenty of cash would be ripe for the social innovation movement to take hold.

If you’re going to be in Dallas on June 10th, come join us!

Tags: Big Brothers Big Sisters North Texas, bigBANG!, Dallas Social Venture Partners, H.I.S. BridgeBuilders, OneStar Foundation, root cause, social entrepreneurs, social investors, Social Velocity, Texas Social Innovation Initiative

A Boot Camp for Young Social Entrepreneurs

Tomorrow, Saturday, March 13th Do Something, an organization that gets teenagers involved in social change, is holding an interactive webcast boot camp for young budding social entrepreneurs and you can watch it here.

The Social Action Boot Camps bring together young community leaders, activists and social entrepreneurs for a day of networking and training dedicated to giving each attendee the tools to grow and sustain their community action ideas, projects and organizations.

Here is the Streaming Schedule:

Do Something Boot Camp Interactive Webcast
From New Orleans
Saturday, March 13th from 9am- 5:30pm

9:00-9:30: Keynote from Do Something Award Winner Divine Bradley
9:40-10:35: Corporate Sponsors: How to pitch your project and manage donor relationships
10:45-11:40: Building a Website
12:50-1:20: Do Something Youth Panel
1:30-2:25: Partnerships
2:35-3:30: Public Speaking
3:40-4:30: Interviews with young social leaders

You can come back here tomorrow to watch the webcast and ask questions of guests and speakers via Twitter (Tweet your remarks to @justgOOdtv with #dsbootcamp) or Facebook chat.

To find out more go to the Do Something Training site.

Tags: Do Something, Social Action Boot Camp, social entrepreneurs

A Watershed for the Social Capital Market?

One of the sessions of the RISE Social Entrepreneurship track was a panel of investors who fund social entrepreneurs (both nonprofit and for-profit).  One of the panelists was Scott Collier, Managing Director of Triton Ventures.  Scott has been a venture capital investor since 1991, serves on the board of the Entrepreneurs Foundation of Central Texas, and is working to engage Austin’s funding community in social innovation.  In the RISE panel Scott was on, a conversation began around mission-related investing, the missed opportunity currently facing foundations, and how a new move by the Gates Foundation may be opening up a whole new pool of funds to social entrepreneurs.  I asked him to write a post on this. It follows here.

I was recently fortunate to be on a RISE panel with a great mix of entrepreneurs and venture investors turned philanthropists, private foundation founders and social investors, all talking about investment in social enterprises.  The discussion emphasized the grant-making functions of the foundations represented on the panel and the exciting ventures that these grants were supporting. However, as often happens, there was no discussion about the potential for social impact investing by the investment functions of these organizations if they were to allocate a portion of their investment capital to activities that could produce both a financial return and a social impact.

I mentioned that this seemed to be a missed opportunity since the investment function of U.S. foundations manages about $550 billion whereas the grant-making function manages a much smaller amount: about $45 billion a year.  This would seem to imply that small program-related or mission-related investment allocations out of the $550 billion under management could represent much greater impact investing potential than would similar allocations of grant funds.  I also mentioned a cautionary tale as revealed in an LA Times article in 2007, where it was pointed out that the Gates Foundation, the world’s largest private foundation, was investing for a financial return in companies whose business practices were causing harm to individuals that were at the same time receiving benefits from NGOs supported by Gates Foundation grant funding.  Given that investment dollars comprise such a much larger sum, such returns-only investment practices could be undermining the value of grants, resulting in questionable net positive impact if viewed holistically.

What I failed to add to this conundrum is that the Gates Foundation has now recognized the opportunity to be a thought leader in making social enterprise investments out of their investment capital.  Below is an excerpt from the Gates Foundation website explaining features of their pilot $400 million PRI initiative.

Q. What is the [Gates] foundation’s new approach to Program-Related Investments?
A. We are working with a range of partners to use Program-Related Investments (PRIs) to deepen the impact of our work. We believe that investments are the right instruments to use in situations in which our program strategies are best served by partnering with revenue-generating enterprises, such as NGOs, financial institutions or companies. These entities may not be able to access investment capital from the private markets because the markets or entities that serve the poor may be perceived as too risky or costly to serve, or investors don’t have good information to assess the opportunities. By providing investment capital directly or by reducing risk to investors, we can help our partners access the capital they need to grow and demonstrate to the market that financially viable opportunities exist that serve the needs of poor or otherwise disadvantaged persons.  We know we can’t solve all problems with these types of investments – grant-making remains critical for those sectors that can never generate revenues or be addressed by market forces.

We have established a pilot program with an envelope of $400 million to invest in a range of investment opportunities. The capital for PRI investments or guarantees will be provided by this special $400M pool which will be managed by the CFO’s office of the foundation. Out of this pool, we will invest in PRIs that directly and meaningfully contribute to the achievement of the foundation’s charitable purposes.

Q. What types of investments will the foundation do?
A. We will evaluate a full range of investment opportunities that could include:

• Debt investments such as loans to NGOs, financial institutions or companies;
• Equity investments such as investments in venture capital funds or (less commonly) purchases of shares in companies;
• Guaranty investments such as bond back-stops, credit guarantees, or insurance.
• Any PRI opportunity must closely align with our program strategies, from increasing financing for agricultural smallholders in Africa, to supporting charter school facilities expansion, to increasing investment in global health technologies.

I spoke with a colleague who is close to Gates Foundation CFO Alex Friedman, who launched this PRI program, and he told me that a key part of the pilot launch was to organize a new group whose financial returns would not impact the performance objectives of the office of the CIO.  This was intended to free the new PRI group to focus more on social return than on financial return.

It is certainly exciting news that this $400 million, representing roughly 1% of the Gates Foundation’s capital under management, is now available for both financial and social return when invested in partnership with social entrepreneurs.  However, what may be even more exciting is that the intention of the move is to encourage other private foundations to do likewise and for Gates to thus be a catalyst for multiples of the $400 million to show up in the market as risk capital for social enterprises.  Could this be the beginning of large pools of capital available for direct impact investing, social venture funds and private equity funds, and the creation of a true continuum of capital availability in what is today a very nascent social capital market?

Tags: Entrepreneurs Foundation of Central Texas, Gates Foundation, Mission-Related Investing, PRIs, RISE, Scott Collier, social entrepreneurs, Triton Ventures

Climb on Board, Austin

Today wraps up the Social Entrepreneur track of RISE, Austin’s SXSW-style conference for entrepreneurs.  It was a lot of fun putting together the track with Jessica Shortall, with lots of help from Annie Frierson, Suzi Sosa, Andy White and the many amazing, inspiring social entrepreneurs in our area.  I’m so impressed with the speakers and panelists that made up the track.  From design-thinking for social entrepreneurs, to domestic microfinance, to technology for social impact, to social investing, to balancing mission and profit, and much, much more.  It was so great to see those working in the gray area between social impact and entrepreneurship together sharing insights, ideas, knowledge, discussion, debate.

I couldn’t get to all of the sessions in the track, and so I’d love recordings of those I missed.  But because RISE is a free conference there is little budget for “extras” like recording equipment and staff.  However, I heard a rumor that some of the sessions were unofficial taped.  If you know of any taped sessions, let me know, and I’ll post them to this blog.  And I will definitely make the case to the organizers of RISE that next year we find a way to tape sessions.  Because this content is just too rich to be shared by only the 25-40 people in the room.

So I wanted to share my takeaways from the RISE Social Entrepreneurship track and thoughts about where we go from here.

First, the takeaways:

• There is tremendous interest and energy around social entrepreneurship in Central Texas
• However, there is little infrastructure or eco-system to effectively support those entrepreneurs
• More social entrepreneurs in the track and attending sessions were women  (that could entirely be based on the fact that the leaders of the track are women, but I think there’s more to it than that)
• There is a debate about whether social entrepreneurs need to bootstrap as long or as hard as traditional entrepreneurs since the same end reward (financial profit) does not really exist for SEs
• Funders of social entrepreneurs are not present in nearly as many numbers as social entrepreneurs
• An “investment banker” or “broker” vetting and connecting social entrepreneurs to potential investors is a key part of the needed ecosystem

And that’s just a beginning list.  There were far too many conversations, insights, war stories, and needs to catalog here.

Which brings me to where we go from here. There is a disconnect for Austin in the realm of social innovation.  When I talk with people in the social innovation space outside of Texas they are always interested to hear that I am from Austin and are sure that Austin is well along the path of launching and growing social entrepreneurs.  Because of Austin’s reputation for progressive ideas, its wealth, its technology background and its rank as the third largest venture capital city in the country, people assume that social entrepreneurship, which often follows from these things, is burgeoning here.  When I tell them that isn’t the case, they are shocked. What is holding Austin back?

We heard some provocative conversations this week and saw some inspiring examples of social entrepreneurs who are making it and funders who are helping them along.  But that’s not enough, not even close.

Social entrepreneurs need access to significant funding at every step of the game from seed to growth, whether their  model is nonprofit, for-profit or a hybrid.  We need to give social entrepreneurs the skills to create solid business strategy around a great idea, language for creating a compelling pitch, infrastructure to grow results.  We need to create communities for social entrepreneurs and social investors to interact, network, learn from each other, forge partnerships.  But most of all we need to collectively say, it’s not enough.  One week a year is not enough.  A handful of social entrepreneurs and social investors in a city of 1.7 million is not enough.  Social innovation is a growing industry, one that Austin should and must climb on board.  I’m not satisfied.  I want to see more.  A lot more.

Tags: Austin, Central Texas, design-thinking, microfinance, RISE, social entrepreneurs, social innovation, Social Investing

Making a Vision for Change a Reality

One of the many things I love about my job is meeting social entrepreneurs (who often don’t even know that they are social entrepreneurs) who have amazing, game-changing ideas for solving social problems.  Their creativity, vision, passion and commitment are truly inspiring.

But the thing that strikes me about some of them, and the main reason I started Social Velocity, is that they don’t know how to make that idea, that solution, a reality.  We can’t expect that the same people who come up with great ideas or have a grand vision for change also have ALL of the skills required to build momentum around that idea and execute on it.  Often people approach me with a great idea, or a great organization, that has hit a roadblock.  They can’t figure out how to take the idea or organization to the next level, how to make their vision a reality.  Often I find that the roadblock exists because they are missing three key steps.

The first step is assembling an effective group of advisors, evangelists, supporters, workers, whatever you want to call them.  This doesn’t have to be an official board of directors or advisors.  But it does need to be a group of people who get the vision, are deeply committed to it and have resources to offer toward making the vision a reality.  These resources could be expertise in the particular solution, connections to influential people, funding, who knows.  But the idea is that a single actor cannot do it alone.  The same is true for people within organizations who want to take the organization in a new direction, toward a new solution.  Again, they need to find key supporters who can help them make their vision for change a reality.

The second key piece is a plan.  An idea for a new solution or an idea for a change in direction is great, but it is just an idea. It is difficult to build action around an idea.  To bring an idea to fruition you have to create a plan for how you will get from point A (where you are right now) to point B (where the vision is a reality).  What is it going to take to get there (infrastructure, funding, people) and how will you make it happen?  A clear, articulate, compelling plan demonstrates that you have done your homework, you know what you are doing, you have a clear vision, and you are going to get there.

Finally, you need to translate your plan into a pitch that will convince funders to jump on the train.  But how to successfully communicate with potential supporters is a key and often misunderstood skill.  You need to translate what you know to be truth (your vision for change) into something that will compel an outsider to become involved.

These three steps are key to making a vision for change a reality.  And this is what Social Velocity helps social entrepreneurs navigate. I think we are wrong to expect social entrepreneurs to do it all alone (assemble supporters, create a compelling plan, build the infrastructure, find funding).  They aren’t superheros; they are just leading the charge.

Tags: change, social entrepreneurs, Social Velocity

The Long View of Change

There is a tendency in the social entrepreneurship movement to think that everything related to social entrepreneurs and social innovation is new.  But  much can be gained by occasionally looking to other sources, examples, people and models to inform how change, in a broader context, happens and is eventually made a new norm.

One of these older models that could prove helpful to social entrepreneurs is the concept of Real Change Leaders–agents of change within successful companies–which was introduced by Jon Katzenbach’s 1995 book of the same name.  By “real change leaders” he meant mid-level, corporate employees who were working to encourage innovation within the company, which in a marketplace that increasingly demands innovation as a competitive advantage were critical to the company’s success.  These Real Change Leaders were not the CEOs or big-name leaders, rather they were the otherwise average, mid-level employees who were moving companies forward in remarkable, yet unrecognized, ways. Through extensive study and interviews, Katzenbach determined that these “real change leaders” share seven characteristics, which interestingly echo how many people describe social entrepreneurs:

• Commitment to a Better Way. They have an inexhaustible and visible commitment to the need for change and an ability to execute successfully on that change. Their change target is exciting, worthwhile and essential to future success.




• Courage to Challenge Existing Power Bases and Norms. They have the personal courage required to sustain their commitment in the face of opposition, failure, uncertainty and personal risk.  They do not welcome failure, but they also do not fear it. They demonstrate the ability to rise again and again.




• Personal Initiative to Go Beyond Defined Boundaries. They consistently take the initiative to work with others to solve unexpected problems, break bottlenecks, challenge the status quo, and think outside the box. Setbacks to not discourage them, and they do not wait around for directives to move.




• Motivation of Themselves and Others. They are highly motivated themselves, but more importantly, they have the ability to motivate and inspire others around them. They create excitement, momentum and opportunities for people around them to follow their example and take personal responsibility for change.




• Caring About How People Are Treated and Enabled to Perform. They really care about others and are intent on enabling the performance of others as well as their own.  They don’t knowingly manipulate or take advantage of others.




• Desire to Stay Undercover. They attribute part of their effectiveness to keeping a low profile. Grandstanding, strident crusading and self-promotion are viewed as sure ways to undermine their credibility and acceptance as change leaders.




• Sense of Humor About Themselves and Their Situation. Their sense of humor gets them through when others around them start losing heart. It also enables them to help others stay the course in the face of confusion, discouragement and the inevitable failures that change produces.

So these Real Change Leaders that Katzenbach chronicled 15 years ago share interesting parallels with those leading change in the social sector today.  Although the ultimate goal of his RCLs was change for the sake of greater profitability, as opposed to social entrepreneurs’ ultimate goal of change for the sake of the greater good, the comparisons are interesting and enlightening.  The book and the stories of RCL’s upon which it is based could hold some interesting insights for those who are working towards change in the much broader context of our communities, our institutions, and our world.

Tags: change, Jon Katzenbach, Real Change Leadership, social entrepreneurs