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Social Velocity blog interview

Sparking a Movement Toward Outcomes: An Interview with Mario Morino

Mario MarinoIn this month’s Social Velocity blog interview, we’re talking with Mario Morino. Mario is co-founder and chairman of Venture Philanthropy Partners, one of the oldest venture philanthropy funds, and chairman of the Morino Institute, a nonprofit focused on technology for social change. His career spans more than 45 years as entrepreneur, technologist, and civic and business leader. He also recently wrote Leap of Reason: Managing to Outcomes in an Era of Scarcity, which I recently reviewed here on the blog.

You can read past interviews in our Social Innovation Interview Series here.

Nell: In your book Leap of Reason, you tell the leaders of the nonprofit sector that they need to make a fundamental shift in how they conduct business. Have you gotten any push back from nonprofits or philanthropists? Or has all of the response to the book been positive?

Mario: We are pushing for some hard changes, so we expected some hard reactions. But to our surprise, the response from nonprofit, for-profit, and public-sector leaders alike has been overwhelmingly positive.

We’ve asked ourselves why we’re not getting more push back. There are probably several factors at work. For one thing, the people who have taken the time to read the book are probably those who are more inclined to be receptive to this message. Those who are natural critics—for instance, those who believe mission and metrics are mutually exclusive or that discipline inhibits charismatic, entrepreneurial leadership—may not have read it. And so that shoe may drop at some point. The more we push beyond those already singing in the choir, the more constructive push back we’ll get.

I’d like to think that another factor is the way we presented the case. We made a forceful case, but we weren’t strident in our tone. We have a strong appreciation for the reasons why these management approaches have not been more widely adopted in the social sector. We sought to focus on what to do versus placing blame.

Nell: Do you think the majority of nonprofits will adopt an outcomes-management approach? And if so, when? What will be the tipping point?

Mario: Even when you take into account all of the work on outcomes, accountability, and mission-effectiveness over the past 15+ years, only a small slice of nonprofits (or government agencies, for that matter) have adopted an outcomes-management approach. So I fear that we’re in for only incremental adoption, unless our sector finds a way to seize the opportunity in this era of scarcity. This funding crisis can enervate or energize us. I really hope it’s the latter. In other words, I really hope this crisis will lead people to look much harder at what they do and how they can do it more efficiently and effectively. I hope it will cause them to go beyond incremental improvement and fine-tuning to rework fundamentally what it is they do.

Nell: It seems that this is a charge you are very much willing to lead. Beyond writing the book, what are you doing to lead the effort to create this fundamental shift in the nonprofit sector?

Mario: I would certainly like to join others in advancing this shift in the social sector and even lead in some areas. But I don’t think I’ve earned the stature to be the leader of a movement of this type. Even with 15+ years in the social sector, some still see me as a newbie!

As I said in the book, to help kick things off I would welcome helping to convene a select group of early adopters who have “been there and done that” and those most instrumental in helping them. I hope that a collective leadership will emerge and offer the beginning of an effort that could put our sector on a different and much more rapid trajectory.

As others began to follow their example, the network effect might well start to take hold. Imagine universities incorporating the outcomes-management mindset and discipline into nonprofit leadership curricula. Imagine funders offering outcomes-management grants to nonprofit leaders who show a real predisposition to use information well, and hiring seasoned staff members who have the expertise to provide strategic counsel and assistance to grantees. Imagine nonprofit leaders and staff joining together in peer-learning networks to share, learn, and push one another. Imagine government funders encouraging and rewarding successful outcomes management through new types of contracts and awards. A cadre of leaders and doers could help spark all of these things—and in doing so, spark a real movement.

Nell: What role can and should philanthropists, both foundations and individual donors, play in the effort to shift the nonprofit sector toward an outcomes approach?

Mario: Funders generally don’t provide the kind of financial support and strategic assistance that nonprofits need to make the leap to the outcomes-management discipline. While a lack of funding is by no means the only barrier, I know many nonprofit leaders who would take up the challenge in a heartbeat if funding, advice, and encouragement were available. The hard truth is that far too many funders have been conditioned to insist that every dollar “support the cause” through funding for programs. They don’t want “overhead” to dilute their grants.

To make the leap to outcomes management, nonprofits need creative funders, like the Edna McConnell Clark Foundation, that are willing to help them manage smarter through greater use of information on performance and impact—rather than forcing them to meet myriad evaluation and reporting requirements that too often do little to help the organization learn and improve. They need funders who understand that making the leap requires more than program funding, and more than the typical “capacity-building” grant. They need funders who are willing to make multi-year investments and offer strategic assistance to help nonprofit leaders strengthen their management muscle and rigor.

Nell: What does an outcomes approach look like for a social service nonprofit with an annual budget of $100,000?  How does this approach apply across the sector?

Mario: It’s hard to adopt this approach if you’re in an organization that small. It would be folly to expect a nonprofit with that budget to have formal outcomes systems, metrics, and the like. That said, I’ve never thought quality and “goodness” were functions of size. Shouldn’t every nonprofit, regardless of its size and infrastructure, have a clear sense of what it’s trying to accomplish, a thoughtful strategy for how it’s going to do so, and some sense of how it will know if it gets there? It’s perfectly understandable that such a small organization may never have crafted a “theory of change” in a formal way, but the organization’s leader needs to have this framework embedded in his or her mind. If not, what’s the rationale for asking others to contribute time and money to support the nonprofit’s work? What’s the basis for asking intended beneficiaries to put faith and trust in the nonprofit’s services?

Nell: What do you think will happen to nonprofit organizations that don’t adopt a managing to outcomes approach? What does the future look like for them?

Mario: They will continue on as they have—at least for a while.

The fiasco with Greg Mortenson and the Central Asia Institute is a cautionary tale. Mortenson had a great story, and for a while his donors took it on faith that his organization was delivering on his grand promises in Afghanistan and Pakistan. Sadly, it appears the organization turned out to be better at fattening Mortenson’s book royalties than building quality programs.

I don’t mean to suggest that all nonprofits are like Mortenson’s! Far from it. But I do mean to suggest that in an era of scarcity, there will be more pressure on nonprofits to show that they are delivering on their promises. More public and private funders will finally look under the hood and ensure things are working well.

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Building the Social Entrepreneurship Movement: An Interview with Lara Galinsky

Lara GalinskyIn this month’s Social Velocity blog interview, we’re talking with Lara Galinksy. Lara is an author, career expert and senior vice president of Echoing Green. Over the last two decades, Echoing Green has invested $30 million in 500 social entrepreneurs around the world. Galinsky is the co-author of Work on Purpose, which provides a framework for aligning passions with talents to achieve personal fulfillment and societal impact. She is also the co-author of Be Bold: Create a Career with Impact (2007).

You can read past interviews in our Social Innovation Interview Series here.

Nell: Echoing Green was in many ways one of the first instigators of the social entrepreneurship movement, founded in 1987 and having launched some of the darlings of the movement like Wendy Kopp of Teach For America, and Michael Brown and Alan Khazei of City Year. How do you think the social entrepreneurship movement has evolved over time? How is the field of social entrepreneurship different now than it was 20+ years ago?

Lara: The most wonderful way in which the field of social entrepreneurship has developed over the past 20+ years is the fact that, today, questions about the “field” can even be asked. Twenty years ago social entrepreneurship was not a field. It was not a movement. It was barely even a term.

Just five years ago a young woman approached me and told me that she wanted to be a social entrepreneur. I took a step back. I had never heard anyone say that they had wanted to be a social entrepreneur before. Now, I hear it all the time.

Universities now offer specializations and masters degrees in social enterprise. A number of new organizations are emerging to fund, support and incubate social entrepreneurial organizations. And more and more people identify themselves as potential social entrepreneurs. This year alone, we received nearly 3,000 applications for our Fellowship.

Nell: How has Echoing Green’s model evolved over time? What are you doing differently and how do you continually reinvent your organization and your contribution to the social entrepreneurship space?

Lara: Echoing Green has always been a very nimble organization, largely because we have been responsive to the evolution of the field of social entrepreneurship. As the field develops, new trends continuously emerge, changing the way we work.

Right now, we are seeing an increase in for-profit and hybrid organizations in the social entrepreneurship space. This year, 31% of the organizations that applied for our Fellowship used one of these two models. A few Echoing Green Fellows that use either a for-profit or hybrid model are Pharmasecure, Sparked.com, and FarmBuilders.

We are also seeing more product development within the space. Some Echoing Green Fellows who epitomize this trend are Global Cycle Solutions, EGG Energy and Mobius Motors.

There has been an increase in mobile technology. Some of our Fellows working within this field include Mideast Youth, Frogtek. You can read more about this particular trend in our recent blog series on mobile technology.

Finally, over 55% of our semifinalists have identified themselves as younger than 35 for the past four years. Inspired by the altruism of the Millennial generation, we have been giving more attention to the career needs of Millennials at large through our new program, Work on Purpose.

Nell: Some have cautioned that the social entrepreneurship movement focuses too much on individual, charismatic social entrepreneurs instead of institutions or broader/deeper efforts for social change. But Echoing Green is very much interested in individual social entrepreneurs, so how do you counter that argument?

Lara: We know that the individual is absolutely key to the success of a social entrepreneurship project. The power of someone who has found their unique contribution to the world—which we call the individual’s “hustle,” the perfect balance of their heat and their head—is undeniable. However, we believe that it is not enough to put strong young social entrepreneurs in the world. We must also create a world that will support these social entrepreneurs and their ground-breaking ideas.

When we began to envision our newest program, Work on Purpose, a few years ago, a number of individuals had already identified Echoing Green as uniquely positioned to help them ignite a career in social change—including those who were not social entrepreneurs. We came to realize that with our 25-year history of sourcing and supporting social innovators who have successfully created personally meaningful, world-changing careers, we had access to career-creation methodologies that were desperately needed among those who want careers in social change, particularly Millennials.

With this in mind, we developed a new book, Work on Purpose, which shares the best practices of our Fellows with a wider population of individuals interested in careers with impact. We are now developing an online platform, workshops, keynote speeches, panel discussions, course workshop guides, small group discussion guides, and other tools for deep exploration to supplement the book. The cost of our failure to harness the potential of the Millennial generation’s altruistic energy by not providing them with the inspiration, the tools and the resources they need to create the social change careers they want is simply too great to ignore.

Nell: Echoing Green provides a very needed injection of capital to startup social entrepreneurs, as do the burgeoning contests and other startup capital activities out there, but there is still a lack of capital at the next stage (growth) for social entrepreneurs. How do you see that capital space evolving, and what will encourage it to grow?

Lara: Of significant importance in expanding the level of capital provided to this space is greater overall recognition and understanding of the activity that is already occurring and studies on the successes and failures that happen. We need to develop our knowledge of what investment instruments make sense for social businesses and how they lead to requisite returns for investors.

The government could encourage capital in the sector by protecting the social investor from loss (downside protection), through collateral provision and other measures. They could also structure investment support in such a way that it amplifies returns to the investors by making public capital available but allowing disproportionate returns to private investors. Both these concepts have been used to effect in the UK.

Finally, greater use of PRIs by foundations and public charities will significantly increase capital flow. There is insufficient understanding around the IRS consideration of valid PRI approaches, and we need more progressive investments to demonstrate the true charitable impact of this type of capital.

Nell: What’s next for the social entrepreneurship movement? What needs to happen to continue to build support for and interest in social entrepreneurship?

Lara: The most important goal is for social entrepreneurs to demonstrate, collectively and over time, that they can tackle the world’s biggest challenges with scalable impact. Social entrepreneurs are nothing if not ambitious, and the field has set expectations of social impact very high. With a meaningful amount of money, attention, and human capital now in the field, Echoing Green hopes to see a steady stream of rigorously evaluated outcomes.

Below that over-arching goal, Echoing Green is particularly hopeful about two areas for continued progress in the field. First, we would like to see a much greater diversity in the social, economic, and geographic background of social entrepreneurs. At a minimum, the social entrepreneur community should mirror the diversity of the communities where social entrepreneurs work.

Secondly, we hope that the broader ecosystem of support structures for the field continues to develop. This includes the vital human capital represented by projects such as Work on Purpose, as well as the political environment, financial system, etc.

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A Case Study in Raising Money to Grow On

Last fall I wrote a blog post arguing that small nonprofits need access to philanthropic equity (money to build their organizations) just as much as larger, more sophisticated nonprofits do. My post was in response to George Overholser’s Social Velocity blog interview where he argued that philanthropic equity (or growth capital) campaigns, where a nonprofit is raising money to build the infrastructure of the organization, are not feasible for small nonprofits. George’s argument and my subsequent post set off a chain of events that led Social Velocity to work with Charlotte Chamber Music to plan and prepare for a philanthropic equity campaign. Over the course of the next several months I will give you an insider’s view of our work with CCM in order (I hope!) to prove my argument that philanthropic equity campaigns can and should be accessible to any nonprofit that has a vision for something bigger and the determination to put that vision to action. Today is the first post in this Raising Money to Grow On series.

In George Overholser’s September 2010 Social Velocity interview he argued that philanthropic equity campaigns just aren’t feasible for small nonprofits:

What about the small organizations that DO aspire to undergo a big transformation?…I believe that it is absolutely vital that we come up with a way to better capitalize these smaller organizations. Sadly, though, at this stage of capital market evolution, it is still quite expensive to prepare for a successful nonprofit equity campaign. Unless several million is being raised [the costs are] prohibitively high. This constrains us to campaigns of $5 million or more, which, in turn, constrains us to organizations that are already pretty large.

A Social Velocity blog reader, Elaine Spallone, Executive Director of Charlotte Chamber Music took issue with George’s argument and responded in the comments:

As the ED for a very small nonprofit (<$300K) I am greatly disheartened to essentially read “yes, we can cure the large guys, but for the rest of you -80% – well good luck! No answers for you yet.” WOW…Really is education and awareness for buyers to support the whole organization vs. its programs enough? (Although I agree wholeheartedly, a needed step.) I believe there has to be a way to “create compelling ‘asks’ for equity capital” that is less expensive. There has to be way to finance a small organization’s desire to meet the needs of the community, which could mean doubling their impact. We are asked to relearn, redo, change our practices to support (finance) the organization’s mission to change the world, but is no one considering the relearning, redoing or changing the expensive processes/methods so all nonprofits can benefit?

Since that is exactly why I launched Social Velocity, to help smaller nonprofits benefit from new ideas like philanthropic equity, Elaine and I began to talk about the challenges that Charlotte Chamber Music was facing.

Elaine felt that CCM was stuck. As a small, but beloved arts organization they had a great product, but they couldn’t get beyond the vicious cycle of never having enough money, never being able to expand their presence and impact. They had a solid board, and a great vision for the future, but lacked philanthropic equity to build the organization to achieve that vision. They had been talking to consultants about conducting a capital campaign to raise money for a permanent artistic director and a new or refurbished building. As Elaine recalls:

At first, we thought we had to launch a major campaign to raise funds for an Artistic Director- that was our major missing piece, and we seemed lost as to how to make that leap in securing significant funds. That is where we were stuck — for over a year.

But I counseled Elaine that they couldn’t get unstuck until they created a strategic direction and plan to get there that included the various infrastructure elements they needed to get to the next step. Again, Elaine recounts:

What Nell helped to clarify in the beginning is that investing in infrastructure will change our picture. It’s not just about one person [an artistic director]. We were a step ahead of ourselves. To get there, we needed to create the compelling plan for philanthropic equity…we were missing a huge step by not having a detailed plan for our future.

I suggested that they launch a philanthropic equity campaign, to raise money for an artistic director, fundraising infrastructure, technology, systems, all the things they needed to build a more effective, sustainable organization. But, before they think about a philanthropic equity campaign, they needed a compelling strategic direction and a plan for getting there. Because people don’t invest significant money in an idea, they invest in a coherent, compelling, executable, exciting, measurable plan for the future.

We put together a proposal for how Social Velocity could help Charlotte Chamber Music create

  1. A compelling, investable strategic plan, and
  2. A pitch and prospect strategy to raise the philanthropic equity needed to execute on that plan.

Elaine then went to her board and a few key major donors to make the case that in order to get out of the vicious starvation cycle, expand their impact, and become the top-tier arts organization they knew they could be, they had to invest in an organization-building process. A couple of key donors stepped up to make the investment to hire Social Velocity.

In the next post in this series, I’ll discuss how we went about creating a compelling, investable strategic plan and the pivotal moment when Charlotte Chamber Music realized that they had a tremendous opportunity to develop a new model for the 21st century arts organization.

Photo Credit: naitokz

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