The Change.org Social Entrepreneurship Blog

I am delighted to announce that I’ve been asked by the Change.org Social Entrepreneurship blog to become a regular contributor.  It’s a real honor to be part of this phenomenal blog, so I hope that you will check it out and join the conversation.

I will still write for the Social Velocity blog as often as I have been, but if you’re interested in my additional posts, check them out there.  My first post “The Danger of Abandoning the Nonprofit Sector” is up today, and here’s an excerpt:

With all the excitement and energy around social entrepreneurship, there’s a tendency to dismiss the sector that was working on social impact long before it was cool: the nonprofit world.  These days, nonprofits get far less airtime in the social innovation movement than their for-profit, social entrepreneur counterparts…Again and again, I’ve heard that innovation will never become part of the nonprofit system — that nonprofits are too set in their ways. Or that the sector is too broken to emerge anew. That attitude, though, is unacceptable. There’s great danger in dismissing the sector. Sure, it’s inefficient, dysfunctional and broken. Yet it has tremendous potential for innovation. Indeed, without innovation in the nonprofit sector, the broader movement to solve social problems is doomed…

Tags: Change.org Social Entrepreneurship blog, nonprofit, Social Entrepreneurship

The Social Side of Entrepreneurship

In less than a month, Austin’s premier entrepreneurship conference, RISE, will be in full swing. March 1st through 5th brings a SXSW-style conference that is quickly becoming the place to be for anyone thinking about launching or growing an enterprise. This year, RISE has added an official social entrepreneurship track to the conference, which seems to be a sign of the times. Social entrepreneurship is starting to take its rightful place next to “regular” entrepreneurship. Perhaps in the future there won’t even be a distinction.

But until then, I’m delighted to announce the lineup of this year’s Social Entrepreneurship track at RISE. Social Velocity is hosting the track, and it is sponsored by the Silverton Foundation.  Jessica Shortall, Director of Giving at TOMS Shoes, and I have put together what we think is going to be a pretty great group of sessions exploring all aspects of social entrepreneurship. In addition, Blake Mycoskie, founder of TOMS Shoes, will be one the keynote speakers of RISE on Tuesday, March 2nd.

The Social Entrepreneurship track will run on Tuesday and Wednesday of RISE week, March 2nd and 3rd. Here is the lineup of sessions:

• Social Investing, Social Entrepreneurship and Social Profit
• Overview of Social Innovation
• Austin’s Emerging Social Capital Market
• Social Enterprise Case Studies
• Seeking Capital for Social Enterprise
• Design Thinking and Social Entrepreneurship
• Economic Development: Microfinance to CDFIs
• Social Media and Social Impact
• Balancing Social Mission and Business Pressures

You can find out more about the entire Social Entrepreneurship track at the RISE website and sign up for those you want to attend. Sessions are already filling up. I hope to see you there!

Tags: Blake Mycoskie, RISE, Silverton Foundation, Social Entrepreneurship, Social Velocity, TOMS Shoes

Losing the Charity Mindset

Along with the burgeoning social entrepreneurship movement comes a bit of hubris that social entrepreneurs know better how to create social change than do the nonprofits that have been working toward social change for years.  Some social entrepreneurs argue that nonprofits are too set in their ways to embrace a new way of creating solutions.  I tend to disagree.  We can’t, nor should we, discount and dismiss an entire sector of people and organizations that have been working on social problems for centuries.  However, I do think that there are some things that nonprofits can learn from social entrepreneurs.  One of those is how to lose the charity mindset.

Nonprofits are sometimes referred to as “charities,” and it is a real misnomer.  But beyond semantics, the word, and more importantly the mindset, does a real disservice to organizations working toward change  A charity mindset is when an organization, its board, its funders or others promoting its work have a narrow view that the organization is benevolent, but not critical, to the world at large.  The charity mindset assumes that a nonprofit starts from the position of need, inadequacy, and burden, rather than a position of opportunity, strength, and effectiveness.  The charity mindset differs from a social entrepreneur mindset in a number of ways:

• Symptoms vs. Solutions: A charity, by its very definition, exists to provide aid to the needy, not to solve the underlying cause of the need.  This is not to say that every nonprofit can work toward solving an underlying problem; there will always be organizations that exist simply to provide basic needs (food, shelter, safety, etc.).  But I wonder if too many nonprofit organizations view their work as residing in the “charity” camp, instead of working, as social entrepreneurs do, to understand the cause of the need and how how they may be able to attack and solve it.




• Fundraising: A fundraiser in the charity mindset apologizes for the burden of asking someone for money, but a social entrepreneur offers investment opportunities to prospects.  Wendy Kopp from Teach for America went around evangelizing the Teach for America story and sought investors who wanted to get in on the ground level of an incredible opportunity to change the American public education system.




• Investment in Infrastructure: Charities spend every last penny on the program and leave little money for building the organization.  Social entrepreneurs understand that it takes organizations, infrastructure, systems, and talent to effectively execute on a solution to a social problem.




• Respect: Charities may be beloved by their supporters, but they may not garner a lot of respect from them.  Social entrepreneurs behave as equal partners with funders in creating solutions, and, as such, they command and receive real respect from investors, volunteers, partners and others.




• True Costs:  Charities like to claim that as much money as possible goes to direct services, but social entrepreneurs recognize the true costs of their endeavors and are open and honest with funders about those costs.  In fact they demand that funders understand and support those true costs.

I think the old adage is true, people will treat you the way you ask to be treated.  If a nonprofit acts like a charity, people will treat it like one.  Nonprofits need to stand up and demand to be treated as critical, equal partners in creating solutions.

Tags: charity, Fundraising, Nonprofits, Social Entrepreneurship, Teach for America, Wendy Kopp

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

Understanding Social Innovation

If you are interested in learning more about the social innovation movement and will be in Austin on May 14th, join me for a seminar, “New Models: Social Innovation.” This 90-minute session will discuss what social innovation is, what the terms social entrepreneurship, growth capital, venture philanthropy, mission-related investing, and social enterprise mean, and what some really innovative organizations are doing in this space.  If you run a nonprofit, serve on a board, run a social business or are thinking of launching one, donate to social impact organizations, or are interested in solutions to social problems, there is great significance for you in the social innovation movement. And because Austin  has a lead role to play in the movement, I’ll examine how Austin compares to the rest of the country.  You can read some of my past posts on Austin’s social innovation ecosystem, where Austin is going and what it needs to be a leader in this space here, here and here.

If you’ve been intrigued by social innovation and want to learn more, join us:

Lunch and Learn: New Models  – The Social Innovation Movement

May 14, 2009
11:30am-1:00pm
At Greenlights

Click Here to Register

Tags: Austin, nonprofit, social business, Social Enterprise, Social Entrepreneurship, social innovation, Venture Philanthropy

Working Towards Scale in Austin

Something pretty interesting is happening in Austin around growth, social entrepreneurship and investment capital.  The KDK Harman Foundation, launched in 2004 by Janet Harman with a $26 million endowment, is spearheading an effort to get the social sector here talking about and thinking about how to grow and replicate successful nonprofit models.  The mission of the KDK Harman Foundation is two-fold:  “To break the cycle of poverty through education while promoting a culture of giving excellence.”  While the first part of the mission is admirable and necessary, it’s the second part that really excites me.  In 2008, when the foundation was only 4 years old, they decided to modify their mission to include the giving excellence piece because, per their website:

Janet [had a] desire to assist Central Texas in creating a culture of giving excellence. The Foundation is actively involved in the community through its role as a host and convener of community stakeholders interested in education and philanthropy. The Foundation also offers opportunities to share information about grantmaking with newly formed foundations as part of its Foundation 101 trainings. KDK-Harman Foundation is committed to funding and celebrating excellence; excellence in programming, excellence in nonprofit management, and excellence in grantmaking.

To that end, the KDK Harman Foundation launched what they call the “Growth Learning Collaborative” last year.  The Growth Learning Collaborative is a social innovation project that brings together various Austin-based nonprofit Executive Directors to discuss and analyze various growth models. The group wanted to talk with and learn from experts and peers about options for growing organizations.  These nonprofits are social entrepreneurs with great organizations that want to figure out how to scale.  I presented to the group in December about the process an organization that is thinking about growth should go through.

One member of the Collaborative is well on their way towards scale.  Heart House is a daily afterschool program for school-age children in neighborhoods known for high crime and high unemployment in Austin and Dallas.  The program has achieved some pretty impressive results for these kids, including:

• 90% of Heart House children improved their reading level by at least one level.
• Teachers report that 96% of Heart House children have improved their math skills.
• Teachers believe 85% of Heart House children have shown an improvement in behavior with adults and other children at school.
• 0% of Heart House children were victims of violent crime or engaged in juvenile delinquency.

Heart House has plans to grow to 25 sites throughout Texas.   They have a great growth plan, and I’m helping them refine it and create an investor pitch for the growth capital they will need to make it a reality.  The founder of Heart House, Anna Land, helped KDK Harman launch the Growth Learning Collaborative because she wanted to learn with others how best to replicate, as she explains:

The idea of the Growth Learning Collaborative has been more than simply expanding our organizations. I wanted us to meet to discuss and plan implementation of best-practice techniques to help grow and — more fundamentally — replicate our organizations. In our case, children across Texas need a resource like Heart House. To that end, we focus on how we can naturally nurture and maintain our sense of organizational culture, our enactment of our missions and values, through cycles of leadership and volunteers across Heart House hubs.

These are relatively new ideas for Austin and Central Texas.  Austin doesn’t tend to grow homegrown nonprofit organizations state- or nation-wide.  By bringing local nonprofits with a vision for growth together and giving them the space and expertise to envision growth and make it a reality, KDK Harman is providing an invaluable service.  It will be exciting to watch how this momentum grows and whether other local foundations and philanthropists follow their lead.  I’d like to see more philanthropists both here and across the country take the lead in encouraging scale, best practices, innovative use of funds and so on.  They are a key player in the movement for social innovation, and they have the resources to make a real difference in the success of the movement.

Tags: Austin, Heart House, KDK Harman Foundation, scale, Social Entrepreneurship

5 Ways to Scale

Key to the entire social entrepreneurship movement is the idea of scale.  If we are truly going to solve a social problem, right a disequilibrium, or fix a crumbling institution the solution has to grow to scale.  It cannot stay small and secluded; it has to grow until it has changed the underlying system.  But scale can be a nebulous thing.  What does it mean, what does it look like, how does it happen?

Peter Frumkin, head of the RGK Center for Philanthropy and Community Service at the University of Texas at Austin and leading nonprofit management and philanthropy thinker and author, came up with a model for understanding the various forms scale can take.  His 5 Models for Scale provides a nice framework for understanding the broader implications of what scale is and what it can look like.  He defines scale as “creating a lasting and significant impact” and defines the five platforms  from which scale can emerge as:

1. Financial Strength: Scale comes from the financial strength and sustainability of a large and enduring institution (usually universities and museums).  Through endowments and deep donor relationships these institutions can weather most, if not all, economic situations and potentially exist indefinitely.  Scale here is not about outcomes or inputs, but rather about the institution itself and its ability to endure.
2. Program Expansion: Scale is a function of the increasing number of clients served.  By growing the number of program inputs (clients) by several multiples, a program can achieve scale.  This form of scale happens in one location, not to be confused with Multi-Site Replication (below).
3. Comprehensiveness: Scale here is achieved when a set of activities and interventions occur within one organization or a closely integrated collaboration of organizations.  For example, when the food, housing, education, childcare and healthcare needs of the homeless are all addressed through one integrated solution, in the case of Jane Addams’ Hull House.
4. Multi-site Replication: Scale in this case expands a program to other sites in the city, region, country or world.  This replication can be instigated either from within the organization (through franchises and chapters) or from outside of the organization through independent efforts of funders or other interested parties.  This form of scale often requires the vision and commitment of a single individual to make it a success, for example with Teach for America or KIPP (charter schools).
5. Accepted Doctrine: In its final form, scale does not involve growth or expansion of an organization or program, but rather an idea.  Scale occurs when a way of thinking or addressing a problem or field changes.  A particular organization or program does not control scale in this case, but rather a new model or way of addressing a problem reaches a “tipping point” where it suddenly becomes the norm.

Each model has its benefits and drawbacks.  For example, the Financial Strength model doesn’t necessarily mean that change is occurring, rather an institution merely persists.  The Program Expansion model, too, doesn’t guarantee impact, rather scale is about increasing the number of inputs.  The Accepted Doctrine model is difficult, if not impossible, to control and mold to a particular outcome.  And, as mentioned above, Multi-Site Replication relies heavily on a key individual, a very clear understanding and articulation of what makes the current model successful, and an ability to replicate that success.

I think this framework is a useful way to understand the various forms that scale can take.  It all goes back to the notion that in order for social entrepreneurship to be a successful movement, we have to understand what it is that we are doing and how we are doing it.  If broad and sweeping change in various areas of need is the ultimate goal, we have to be smart and strategic about how that change is happening and what form of change makes the most sense.  Impact, change, scale can take many forms depending on the problem being faced and the best solution(s) for it.  I imagine that as the field of social entrepreneurship continues to evolve other forms and understanding of scale will emerge.

Tags: Hull House, KIPP, Peter Frumkin, scale, Social Entrepreneurship, Teach for America

The Beginnings of a Social Capital Market

One of the key things necessary to fundamentally change our ability to solve social problems is the creation of a social capital market.  By social capital market I mean that financial tools and vehicles of a significant size, volume, variety and usefulness are made available to social entrepreneurs and ventures.  Nonprofits and social businesses are sorely undercapitalized.  In order to really change their ability to scale and attack problems at their root cause we need to create significant social capital through various means (philanthropy, equity, debt, etc).  This past week highlighted some exciting developments in the social capital market space.

First, late last week the Senate passed the Serve America Act, which the House and President are also expected to approve, which, among other things, creates a A Social Innovation Fund Pilot Program.  The Pilot Program will pool government and private investments into a venture philanthropy fund to scale successful nonprofit programs. It would make $50-million available in 2010, growing to $100-million in 2014, with matching funds required from other sources.

Second, Root Capital, a nonprofit social investment fund that provides capital, financial training and market connections to grassroots businesses that build sustainable livelihoods and transform rural communities in poor, environmentally vulnerable places announced last week their launch of a $63 million growth capital campaign, in partnership with the Nonprofit Finance Fund (another leader in the creation of social capital vehicles).  The growth capital will allow Root Capital to:

• establish a sustainable social enterprise and fully self-sufficient lending program by 2013
• accelerate its ability to impact global poverty by linking rural small and growing businesses with capital markets
• triple its loan portfolio, enabling it to lend $121 million each year to more than 350 grassroots businesses, representing one million households

The campaign will be a combination of philanthropic equity and debt capital.  They expect their investors to include foundations, corporations, socially responsible investment firms and individuals. Funders and investors already committed include The Kendeda Fund, The Rockefeller Foundation, and the Skoll Foundation.

And finally, last week was the Skoll World Forum on Social Entrepreneurship, the annual gathering of leading social entrepreneurs.  Among many topics of conversation was the creation of a social capital marketplace to support these great social entrepreneurs.  Nathaniel Whittemore captured amazing video interviews with some leading attendees.  Two of these interviews focused on the creation of social capital markets and gave some very interesting insights on how this marketplace is being created and what remains to be done.  First is his interview with Shari Berenbach, the President and CEO of the Calvert Social Investment Foundation.  Shari describes how the Calvert Social Investment Foundation creates a marketplace for investors interested in social innovation:

SWF09 Interviews: Shari Berenbach from Nathaniel Whittemore on Vimeo.

Second is Nathaniel’s interview with Steve Hardgrave, head of Gray Ghost Ventures, which makes early stage equity investments in social ventures.  Steve has a really interesting perspective on the creation of the social capital marketplace and encourages those involved to think much bigger about what is required:

“We need to dream bigger. To think that $100 million is a lot of money, in real world terms it’s not, it’s a drop in the bucket.  So all of us making strides to take this, not to millions or 100 millions of dollars, but billions of dollars is a challenge that we can’t let up.  The urgency of that challenge needs to be very real for us.”

SWF09 Interviews: Steve Hardgrave from Nathaniel Whittemore on Vimeo.

Very true.

Tags: Calvert Social Investment Foundation, Gray Ghost Ventures, Nonprofit Finance Fund, Root Capital, Serve America Act, Skoll World Forum, social capital market, Social Entrepreneurship

Change is Here

One of the criticisms of an otherwise very well received speech last night by President Obama was that it was “too ambitious.”  Last night he vowed to take on healthcare and education reform, the recession, global warming, 2 wars, among other things.  That is ambitious, but does he have a choice?  Do we have a choice?  You could actually argue that it wasn’t ambitious enough.

Our world is changing so quickly and the problems are becoming larger and more complex.  This complexity requires, and indeed demands, a completely different, and by previous standards “ambitious,” approach.  The very ways in which we live, work, play, communicate are all changing, and exponentially.  Take social media and the flood of information it provides; we’re all trying to figure out how to keep up.

Lucy Bernholz, president of Blueprint Research & Design (a philanthropy consulting firm) and a philanthropic thought leader, argued recently that what we are experiencing is not a recession, but a complete restructuring of our world.  Our institutions are crumbling, our environmental resources diminishing, our economy melting down.  We are charting completely new territory:

It doesn’t make sense to think of this as a dip in an otherwise upward trend. It is more like a turn off onto a different path. People born since 1990, all over the globe, have fundamentally different assumptions than those born before that year about where information lives, who controls it, where and how work gets done, what the “proper” role of government might be, where their friends live, how much personal privacy they have, want or value, what kind of resources will be needed to fuel their futures, what kind of innovation might fuel the economies in which they will live, and what their individual relationships to others – proximal and far away – are, could be, or might be.

And she suggests many ways in which this restructuring could take place.  Several on her list point to a growing convergence among public, private and nonprofit approaches (which I’ve talked about before):

Social enterprise begins to morph the philanthropic giving that exists to its left and the commercial enterprise that exists to its right (on a spectrum from giving to investing

Individuals’ daily contributions and activities are a deliberate and recognized mix of paid and unpaid – and successful enterprises build themselves to catalyze those inside/outside, professional/volunteer, expert/amateur, user/producer contributions

Philanthropic giving is really asked (read: required by regulators or purchased: in a marketplace) to prove its value in the funding food chain of producing social good. So are social investing, social enterprise, and socially responsible investing.

Enterprises and activities that generate economic, social and environmental benefits move from marginal to the middle – and innovation shifts elsewhere

We will no longer assume that nonprofit = social good, commercial enterprise = profit, rather we will think about what we need as a society (investigative reporters, an independent media, universal literacy, human rights) and figure out new forms of delivering those things

So financing, once separated into private and nonprofit buckets, merges into a results bucket that combines social impact and financial profit.  Problems are no longer addressed from a profit or nonprofit position, but rather from a solution position, which draws on both.  Activity that provides a blending of profit and social good is no longer marginalized, but is actually revered and becomes the norm.

What we are already seeing, and will continue to see more and more, is a convergence of private, public and nonprofit money; private and nonprofit operating principles; private, public and nonprofit goals and reasons for being; private, nonprofit and government approaches to problems.  We no longer exist in neat categories that inform our activity, funding, thought, approach, world-view.

The social entrepreneurship movement has taken off so dramatically in recent years in large part because of this growing convergence.  People are recognizing that the old separations no longer make sense or work.

Convergence is real and is happening everywhere.  Those who are not “ambitious” enough and continue to view the world in stale and unbending categories will be left behind.

Tags: convergence, Lucy Bernholz, nonprofit, Obama, Philanthropy, Social Enterprise, Social Entrepreneurship