With a national election, hurricane Sandy, and Giving Tuesday, November was a busy month. All three events encouraged reflection about social change. And at the same time we had some pretty interesting arguments for how two of the sectors supporting social change (philanthropy and government) needed to shift as well. All made for a fascinating month of reading.
Below are my top 10 picks for what was worth reading in November in social innovation. And as always, please add what I missed to the comments. And if you want to see an expanded list, follow me on Twitter, Facebook, LinkedIn, Pinterest or ScoopIt.
You can see the 10 Great Reads lists from past months here.
- Even though hurricane Sandy hit at the end of October, much of November was spent cleaning up and reacting to the powerful storm. Patrick Davis reflects on what our reaction in natural disasters says about human nature.
- And from Sandy we moved into the national election where, once it was over, there was much to learn. First Lucy Bernholz marvels at Nate Silver (the statistician that very accurately predicted the outcome of the election) and wonders what the corollary is in the philanthropic world. She asks “Who will be the first big philanthropist to put predictive analysis to the test in the social sector?” And apparently there is much to be learned from the Obama campaign’s email tactics during the campaign.
- November also saw the launch of “Giving Tuesday,” an online effort to kick off the philanthropic season, just as Black Friday and Cyber Monday are the beginning of the commercial Christmas season. While it seems like a great, innovative idea, Tim Ogden disagrees arguing that it won’t “materially affect giving in any positive way.”
- It looks like it’s time to get tough with foundations. The PhilanTopic blog argues, “No More Free Rides: Foundations Need to Increase General Operating Support Now.” Amen to that! And GlassPockets, the Foundation Center’s online effort to increase foundation accountability and transparency now has 50 foundations participating, representing $138 billion in assets and more than $6.5 billion in annual giving, or 15% of all U.S. foundation giving.
- And the government has work to do as well. Former Social Innovation Fund Director Paul Carttar writes a call to action about what government can do to more effectively encourage social innovation.
- The drum beat for nonprofits to measure outcomes continues. Writing on the Stanford Social Innovation Review blog, Mollie West and Andy Posner encourage nonprofits to go the way of business and government and start using The Math of Social Change.
- And there is a really interesting new development in the ongoing effort to compare and rate social change organizations. The Social Impact 100 Index was unveiled in November. Modeled after the S&P Index in the financial markets, this effort by the Social Impact Exchange analyzes and picks the best 100 nonprofit investments for donors. It will be very interesting to see how this effort evolves and whether it transforms the nonprofit rating space.
- Despite a tough economy, charitable giving rose slightly in 2011. But the real news is that online giving has grown to a $22 billion industry.
- And speaking of fundraising in the online world, social media has completely disrupted the old model for how a nonprofit engages a donor, so says Julie Dixon and Denise Keyes. And Kivi Leroux Miller agrees.
- On the Managing the Mission Checkbook blog, Kate Barr cautions that nonprofit sustainability isn’t just about revenue, it’s about 1) working to achieve your mission 2) integrating a successful business model and 3) adapting and changing. Agreed!
Photo Credit: kadorin
There was much discussion in August about money. We heard that foundations should be more open to risk and should engage with nonprofits to find the best solutions. And we found out some fascinating information about how Americans give. And there were some exciting developments in the newest social sector funding vehicle, the social impact bond. What a great month!
Below are my top 10 picks for what’s worth reading in August in the world of social innovation. But please add what I missed to the comments. And if you want to see more of what catches my eye, follow me on Twitter, Facebook, LinkedIn or Pinterest.
You can see the 10 Great Reads lists from past months here.
Here’s August’s 10 Great Reads in Social Innovation:
- It looks like social impact bonds are starting to take off in America. This innovative social financing partners private investors, public bonds and nonprofit organizations to solve social problems. Goldman Sachs has gotten on board with a $10 million investment in a New York City program to reduce prison recidivism rates.
- Writing in the New York Times, Georgetown University professor Peter Edelman breaks down the factors contributing to a 15% poverty rate in America and what needs to change to improve it.
- I can’t tell you how many times I hear complaints from nonprofit leaders that social media won’t really improve fundraising. Try these on for size. Geri Stengel (guest posting on Beth Kanter’s blog) shows how the Genocide Intervention Network found major donors through social media, HubSpot offers 7 Creative Ways Nonprofits Can Use Social Media to Drive Donations and Kivi Leroux Miller explains How Social Media and Fundraising Fit Together.
- Guest blogging on the PhilanTopic blog, Derrick Feldmann argues “We need donors who are truly willing to embrace risk and invest significant dollars in potential solutions that may not yield immediate results but get us closer to our ultimate objective, even if it’s only by demonstrating what doesn’t work.” Amen to that! And Rodney Foxworth seems to agree.
- On the Stanford Social Innovation Review blog Sheetal Singh writes that there is a new active, engaged citizen movement in America, but that nonprofits are missing the opportunity to participate. She argues that “nonprofits need to realize that the “new citizens” are no longer passive recipients of their services; they demand engagement and inclusion. If nonprofits don’t adapt to this paradigm, they will be left out of the conversation.”
- One of my new favorite bloggers, Mark Hecker, does it again with a great post encouraging nonprofit and government leaders to be “fearless” in setting goals that will knock social change out of the park.
- A new study by the Chronicle of Philanthropy reveals how Americans give to charity. It turns out you give more if you have less or live near those who have less. But there is much more data to explore on their website. Fascinating.
- Forbes uses the World Wildlife Fund of The Netherlands as a case study to demonstrate the Five Steps to Growing Your Social Impact.
- Lucy Bernholz takes issue with foundation application processes and calls instead for a model “where foundations and nonprofits are working together – from idea generation through proposal, implementation and assessment – to actually solve problems.” Wow, imagine that.
- The Gates Foundation blog demonstrates how support of public libraries is a critical part of transforming developing countries.
Photo Credit: Library of Congress Archives
There is an increasing drumbeat in the world of social change that nonprofits must start measuring their work. Thought leaders like Mario Morino with Leap of Reason, Bill Shore’s recent blog post “What Does Success Look Like?” and David Henderson’s (recently interviewed on the Social Velocity blog here) ongoing Full Contact Philanthropy blog, to name a few, are adding to the chorus.
The argument among thought leaders, funders, raters and others in the social change sector is increasingly that nonprofits MUST:
- Figure out what they exist to do (a theory of change)
- Create a disciplined operational model for creating that change
- Measure whether the change is actually happening
- Articulate that change in order to garner more support
But all of this is fairly new to the nonprofit sector and not yet widely practiced (by a long shot). In fact, some of these ideas are still quite controversial. Let’s take #2 for example, “Creating a disciplined operational model.” David Henderson analyzes this well in his post last week. Although David gets a little bogged down in jargon, his idea is a really great, but probably touchy, one.
He argues that nonprofits must become more discerning and disciplined about who they provide service to. Because nonprofits have limited resources, they cannot serve everyone. Therefore instead of serving people on a first come first served basis (which is the norm), they should instead serve those who they can best help. In other words, they should determine and then serve those populations of people who will benefit the most from their intervention:
In the case of the youth workforce development program, while all low-income youth would qualify for services, we might have a preference for placing people into the program who are likely to complete the internship. In this case, one could use historical data to fit a predictive model that provides some insight into what characteristics made an individual more or less likely to have completed the program in the past. Under this framework, social welfare maximization would involve not only placing people into the program, but maximizing the number of people in the program who complete the internship.
The idea is that instead of filling up the program with any youth who have a need, the nonprofit would create more social change by thoughtfully selecting types of children on whom they could have the most impact.
To the nonprofit world, which is very much focused on trying to help as many people as possible, this is a potentially radical idea. But if smartly employed, nonprofits could actually provide more social change through this disciplined method. And in an increasingly resource-constrained environment, it makes sense for nonprofits to want to get the highest return on their program resources.
In order to take this approach, however, nonprofits must have a theory of change. You cannot create social change if you don’t:
- Know what you want that change to be, and
- Measure whether that change is happening
In an increasingly competitive marketplace, it is getting harder and harder for nonprofits to attract support. The harsh reality is that those nonprofits that develop a smart theory of change, measure whether that change is happening, and then articulate the change to supporters will increasingly be the ones that survive. Not to mention that they will be the ones that actually create social change.
Photo Credit: Colin Smith
Because of the popularity of the past two Financing Not Fundraising overview webinars in October and November, I’ve decided to launch a webinar series that breaks the Financing Not Fundraising concept into its various parts and expands on how to approach each element.
I will kick off this new webinar series in January with a new webinar each month. Some of the webinar topics will be:
- Creating a Financing Plan
- Finding Individual Donors
- Developing a Message of Social Impact
- Raising Capacity Capital
- Evaluating Earned Income
- Calculating the Cost of Fundraising
- Moving from Push to Pull
- Getting Your Board to Raise Money
If you want to find out when those webinars get scheduled in the new year, sign up for our the Social Velocity e-newsletter.
But in the meantime, if you want to get up to speed on the overall concept of Financing Not Fundraising, check out the Financing Not Fundraising Overview webinar.
This webinar, based on our popular Financing Not Fundraising blog series will show nonprofits what a broader approach to securing the overall financing necessary to create social change looks like, including:
- How to align your nonprofit’s mission with the money needed to deliver on it
- Why a message of impact results in more money
- Understanding the critical difference between revenue and capital
- Why overhead isn’t a dirty word anymore
- How and why to calculate the net revenue of money raising activities
- When to explore new revenue streams
If you’ve been following the Social Velocity Financing Not Fundraising series and you want to learn more, or if the series has brought up some burning questions that you’d like to have answered, join us for this interactive webinar.
If your staff, your board, and your donors are worn out, rest assured, there is a better way. Join this webinar to find out how.
Financing Not Fundraising: Rethinking How Nonprofits Bring Money in the Door
This post originally appeared on the Change.org Social Entrepreneurship blog earlier this year.
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.
The issue is complicated by the fact that nonprofits have two sets of consumers: those who benefit from the product or service (clients) and those who buy the service (funders, investors, philanthropists). There is increasing competition for both sets of consumers.
In order to attract the consumers who buy services (and who, by the way, increasingly want a social return on their purchase) nonprofits must articulate the value that the consumer (donor, investor, philanthropist, sponsor, whatever you want to call them) receives by writing a check.
In the nonprofit sector the closest thing to a value proposition has been a case for support. But when this is created (which isn’t often) it tends to focus on the organization and its needs rather than on the potential social return on investment for the funder. A good value proposition articulates how an organization is uniquely positioned to create significant social impact that is much greater than the costs associated. It involves an organization analyzing, understanding and delivering on three very important things:
- Capability: What is the organization uniquely positioned to provide to the community (the marketplace). Why is this organization better positioned than other organizations (nonprofits, for-profits, government) to deliver it?
- Social Impact: What change is the organization creating in the community, region, world? Why is this significant? Why should/will consumers (funders) care?
- Cost: How do the costs of the service being delivered compare to that social impact? Is there a social profit being achieved, i.e. are the costs involved in delivering the service significantly less than the benefits? Will a funder (who is paying these costs) receive a significant social return on their investment in the organization?
A value proposition is less about a well-articulated statement and more about an organization’s ability to think through these questions and really understand the marketplace in which they operate. More and more the nonprofit that can effectively execute on a social value proposition will find the financial stability that ultimately leads them to create lasting social change.
var _gaq = _gaq || ; _gaq.push(['_setAccount', 'UA-6524244-1']); _gaq.push(['_trackPageview']);
In part 5 of our ongoing blog series, Financing Not Fundraising, we are discussing how to move fundraising messaging away from organizational needs and toward social impact. In so doing, a nonprofit can enjoy an individual donor base that is more invested, engaged and committed to the work the nonprofit does in the community.
To recap, our Financing Not Fundraising blog series was born out of the reality that fundraising in the nonprofit sector just doesn’t work anymore. In fact, traditional fundraising is holding the sector back by keeping nonprofits in the starvation cycle of trying to do more and more with less and less. Really, what the sector needs is a financing strategy, not a fundraising one. That means that nonprofits have to break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all of their activities. Instead, nonprofits must work to create a broader approach to securing the overall FINANCING necessary to create social change. You can read the entire series here.
Fundraising often uses the messaging of organizational need:
- “We need $100 to provide our programs.”
- “We need $1,000 to meet our goals.”
- “We need to build a new building.”
But that’s not how to raise money effectively. To raise significant money, nonprofits need to focus on how they translate money into social impact. The fundraising message of organizational need stops at the nonprofit. The fundraising message of social impact takes the argument much further, demonstrating how a nonprofit translates funds raised into social change, through a three step process:
- A donor invests in a nonprofit organization
- That investment is translated by the nonprofit’s theory of change into some sort of social impact
- Some change occurs in the community as a result
The nonprofit is merely an intermediary between a donor and social impact. Therefore, the donor is not investing in a nonprofit organization, rather they are investing in the social impact the nonprofit creates.
Helping to create social change is much more powerful to a donor than simply helping a nonprofit organization. And it garners larger, more long-term donor investment and engagement in the work of the organization.
To understand this more clearly let’s take a look at how the message of organizational need differs from the message of social impact:
In every way, from the focus of the messaging, to the fundraiser’s approach to donors, to the donor mentality, to how the organization operates, an organizational needs mindset is so much more limiting than a social impact mindset.
So what does this actually look like in fundraising messaging? Let’s take an example of an after-school program for at-risk children.
According to the nonprofit’s theory of change, they translate dollars into positive outcomes for the children in their charge (increased student achievement, fewer high-school drop outs, fewer behavioral issues, etc.). If the organization were to fundraise around the organization’s needs it might sound like this:
“Help us reach our goal of raising $100,000 for our program.”
But if instead they were to fundraise around a message of social impact, it might sound like this:
“Invest in our work to give kids a better future, making them contributing members of society and our community stronger and healthier.” The first message is about strengthening an organization, the second message is about strengthening a community.
The message of impact is not just something nonprofit’s should use for major donor asks. It can be used to varying degrees in all fundraising campaigns, large or small, and in all channels (social media, direct mail, email, in-person). In so doing, the organization is creating a loyal following of donors who believe in the change the nonprofit is creating and view themselves as critical partners in making that change happen. For help crafting your nonprofit’s message of impact, download our Creating a Case for Support Step-by-Step Guide.
If you want to learn more about applying the concepts of Financing Not Fundraising to your nonprofit, check out our Financing Not Fundraising Webinar Series, or download the 27-page Financing Not Fundraising e-book.
There is a growing discussion among social impact organizations and those who fund them about how to measure impact. It is indeed a very slippery endeavor.
Mario Marino, Chairman of Venture Philanthropy Partners (a venture philanthropy fund in Washington D.C. that makes growth capital investments in nonprofits) has been encouraging nonprofits to measure outcomes for years. Indeed one of the fundamental characteristics of venture philanthropy is a reliance on metrics and outcomes for investment to happen. He recently wrote a post arguing that he is “increasingly worried that the vast majority of funders and nonprofits are achieving, at best, marginal benefit from their efforts to implement outcomes thinking.” He argues that in an zealous pursuit of metrics we have left common sense and “softer” impact behind and encouraged nonprofits to move away from the impact they were working towards.
To add further confusion to the outcome measurement discussion, the Gates Foundation’s Melinda Tuan studied 8 approaches to measuring cost vs. social impact, or the value that nonprofit organizations create versus the cost of their activities. The results of the study were disheartening; none of the approaches they studied was a magic bullet, all had significant drawbacks, which led them to conclude: “Integrated cost approaches to measuring and/or estimating social value are still in the nascent stages of development due to the lack of maturity in the field of social program evaluation.”
And there are other camps working towards outcome measurement, like those debating about whether randomized control trials (a research methodology where a random group of program participants is tracked and compared to a random group of cohorts who did not participate in the program) are feasible for nonprofits. And on the social business side, the GIIN (Global Impact Investing Network) is developing standards for measuring and communicating the social impact of investments known as The Impact Reporting and Investment Standards (IRIS). And that’s just a start.
This whole social impact measurement endeavor is incredibly important because if we can figure out a way to measure which social change efforts work, and which don’t, we can allocate resources accordingly and, in theory, get closer to solutions to social problems.
But I think we need to first take a step back. As is so often the case in efforts to build nonprofit capacity, effectiveness and infrastructure (including, in this case, the ability of nonprofits to evaluate their work) the focus is on the largest, most resourced nonprofit organizations. Let’s remember that more than 80% of nonprofit organizations have budgets under $1 million (see the Nonprofit Almanac). Budgets that small leave very little room for funds to support randomized control trials or other kinds of outcome measurements.
But an even bigger roadblock is the fact that many nonprofit organizations have not articulated their theory of change, or their logic model. Many nonprofit organizations are doing good work, but they don’t necessarily have an articulated strategy around that good work. A logic model helps an organization understand and articulate how they believe that they translate resources (inputs) into social impact, or change in a community. This understanding allows the organization to better articulate (to potential funders, volunteers, supporters, partners), and create strategy around, their work. A potential logic model for an English as a Second Language after-school program could be as follows:
One of the first steps Social Velocity undertakes with clients who want to increase organization capacity, sustainability, revenue, growth, or really any kind of progress, is to create a logic model with the organization. The majority of nonprofits that I encounter don’t have an articulated logic model or theory of change. It may seem like an academic exercise, but I would argue that it is absolutely critical to just about anything a nonprofit does. In order to understand their place in the community, the value that their work adds, how additional inputs (like funding) can increase impact, and their strategy for delivering services, they need to articulate this process.
But the larger debate about outcome measurement ignores the fact that the majority of nonprofit organizations have not completed step 1 in outcome measurement: articulating a strategy for using resources to create outcomes. Once this is articulated, we can talk about how to measure whether that strategy is actually coming to fruition.
Lucy Bernholz, head of Blueprint Research and Design, a philanthropy consulting firm, and thought-leader on trends in philanthropy is preparing a monograph on what 2010 will hold for the social sector. As a true adopter of social media, she is asking others to contribute, in essence crowd-sourcing answers, this year to her annual “what will next year bring” treatise. Last week, she asked her blog readers, Twitter followers, and all others the question: “What trend, change, entity, or idea will matter most to the social sector in 2010?”
She’s gotten a great set of responses, in blog, email, Tweet, and other forms, which she and others are collecting. It’s kind of an interesting experiment to ask a broad question to the universe and see what you get back, and whether it is intelligible and adds anything to what she may have already been planning to write. It is also interesting to navigate the very fine line between future-telling and wishful thinking. I probably tend to fall into the latter category, but if we don’t envision the future we want to see, we probably won’t get there.
I submitted my thoughts to Lucy via Twitter, but it is difficult to distill broad ideas into 140 characters, so I will elaborate on my thoughts here.
There are three things that I think will matter most to the social sector in 2010:
- Increased Philanthropic Dollars Will Go to Organization Building. Donors will increasingly realize that they can achieve a greater social return on their investment (more social impact) when they invest in the capacity, or growth of a successful nonprofit. That is to say that donors will increasingly realize the power of BUILDING organizations rather than BUYING services. I don’t think donors will move away from buying services, there will still be a majority of that. But I think donors will start to understand the difference between a “donation” where they are simply supporting an organization’s current program, versus an “investment” that makes the organization stronger, healthier, better positioned to address the social problem head on.
- Nonprofits Will Move From Outputs to Outcomes. And in order to meet this trend of donors wanting to invest rather than donate, nonprofits will begin to understand that they will attract more capital if they can demonstrate a social return on investment, or a change in outcomes, not just outputs. Outputs have been a favorite of the nonprofit sector, i.e. 500 kids went through our after-school program, 1,000 meals were served in our kitchen. But outputs don’t demonstrate social impact, or a change to a problem. Outcomes do, which is what investors increasingly will want to see. Outcomes are about changed lives, changed trajectories. It is so much more powerful and compelling to be able to say that the 500 kids that went through our after-school program stayed in school and increased their academic achievement which was a marked difference from their cohorts that didn’t attend our program. Then, if you can continue to track those children and demonstrate that they continued to stay in school at a higher rate than their contemporaries, you have a compelling change to a trajectory. You begin to show how your organization is an intermediary between donors who want to invest in social change and a change you are making in the community. I believe that philanthropic capital will begin to flow more readily to those nonprofit organizations that can demonstrate outcomes as opposed to outputs, and those nonprofits that can comply will be more successful at attracting capital.
- The Social Capital Market Will Increasingly Include Philanthropic Capital. The social capital market to date has focused mostly on investing in social businesses that provide both a social and financial return. Philanthropy and nonprofit organizations have been somewhat left behind. But this will change with a growing recognition of the benefits of broadening the definition of social capital markets to include nonprofits and philanthropy. There is much to be gained when ALL organizations working towards social impact and ALL investors interested in social return can pool resources and work towards closer collaboration, creation of new financial vehicles, sharing of ideas and information.
Perhaps 2010 is too early for all three of these trends to really take hold, but I think the beginnings are there. It will be interesting to see what Lucy comes up with, and what actually starts evolving in a few short months when the new year begins.
But in the meantime, what are your thoughts? Where do you see the social sector going in the coming year?
- The Nonprofit Sector and the
Philanthropy That Funds It Are
Find Out How to Keep Up
in our June 25th
Embracing the Future of the
Nonprofit Sector Webinar