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

What Nonprofits Can Learn From Social Entrepreneurs

It seems that the social entrepreneurship movement is taking the world by storm. In recent years tremendous energy, new ideas, and (we hope) resources are moving toward solving social problems. Saving the world has suddenly become cool.

But, as I’ve written before, we can’t forget the sector that was working on saving the world long before it was cool–the nonprofit sector.  And in fact, there is much that the social entrepreneurship movement can offer to rethink, reinvigorate, and remake the nonprofit sector.

To that end, Social Velocity has just released a new white paper, “What Nonprofits Can Learn From Social Entrepreneurs,” detailing what nonprofits can borrow from the movement in terms of financing, articulating, planning and thinking about their work. Here’s an excerpt:

Social entrepreneurship is not a panacea. But there are things to be learned from a movement that is re-envisioning the future, finding new ways to finance social impact, working towards BIG goals and turning the status quo on its head. The social innovation movement provides an opportunity for the nonprofit sector to see things in a new way and move the best ideas forward. And in doing so, the nonprofit sector–the people, organizations, and resources it encompasses–could revolutionize social change in this country. But becoming more innovative involves some dramatic changes in a nonprofit’s mindset, goals, and approach to funding.

Nonprofits need to think bigger–much, much bigger. One thing that all social entrepreneurs have in common is their predilection toward bold thinking. What if nonprofit organizations took a new approach and became bold? Really BOLD. This change in perspective, in goals can revolutionize an organization. No longer are the board, staff and funders content to add a few sites each year with no end goal. Rather, they understand and rally around their long-term goal, which is to solve a problem. And they see every effort they make, every meeting they come to, every investment they secure as getting them that much closer to that solution. It can transform an organization, and ultimately solve a problem…

You can download the white paper here.

Photo Credit: SI Camp

Tags: nonprofit, Social Entrepreneurship, Social Velocity

We Need an Ecosystem for The Bottom 80%

In response to my post last week on the Change.org blog about the Social Innovation Fund, Sean Stannard-Stockton, of the Tactical Philanthropy blog, wrote a comment that really got me thinking.

My post argued that the $50 million federal Social Innovation Fund is only one small piece of the capital the nonprofit sector needs. The fund will help the top nonprofit organizations, but will not remedy the lack of capital available to the smaller, less sophisticated nonprofits that make up the majority (80%) of the sector. Sean rightly pointed out that like the business sector, the vast majority of nonprofits are small, and as we have done with businesses, we need to create different expectations for different kinds of nonprofits.  I would take Sean’s comments even further and argue that we actually need to create a similar ecosystem of funding and expertise for the nonprofit sector, as we have done for businesses.

Sean writes:

One thing I think that people need to keep in mind when they point to how many nonprofits are small is that the same is true in business. While good revenue numbers are hard to find, did you know that 73% of for-profits have less than 10 employees and 54% have less than 4 employees? It seems to me that as a field we need to do a better job of segmenting the nonprofit market and having very different expectations for nonprofits which are “small businesses” vs those that are “public companies.”

Sean makes a critical point. The vast nonprofit sector is often lumped together as one. When in reality, the sector is incredibly diverse. And although over the past 10 years there have been some innovative strides made in providing capital, expertise, and other resources to the top 20% of the nonprofit sector (such as venture philanthropy funds like New Profit and Venture Philanthropy Partners and management expertise from consulting companies like Monitor and Bridgespan) the fact remains that the “bottom” 80% of the nonprofit sector is still very much alone.

This is one of the reasons I started Social Velocity. I saw a real hole in the marketplace in terms of capital and management expertise to the bottom 80% of the nonprofit market. A $500,000 nonprofit organization can’t engage a Monitor or Bridgespan group, and a venture philanthropy fund wouldn’t be interested in scaling them since no one will fund evaluation to prove their results.  These organizations are stuck within the vicious starvation cycle and cannot get out.

We need to do a better job, as Sean says, of segmenting the nonprofit sector and creating appropriate expectations for those different segments, but we need to go much further. We have to create an ecosystem of expertise and funding for the smaller, less sophisticated segments of the sector, which includes:

• Educating smaller, less sophisticated philanthropists that creating solutions requires funding for less sexy things like capacity, organization building, evaluation
• Providing significant capacity capital to build out revenue functions, attract and retain top talent, articulate a value add, message effectively
• Supplying growth capital to nonprofits who have a great solution and the desire to scale
• Creating realistic and cost-effective evaluation tools so that smaller organizations can prove their impact along with the big guys
• Securing management expertise to help smaller nonprofits create strategic and growth plans, articulate their impact and value add to potential investors, develop comprehensive financial strategies, etc.

I think it’s fabulous that there is a growing understanding that nonprofits can’t do it alone anymore. And I’m so pleased to see new funding vehicles like the Social Innovation Fund that are helping to take social innovation to the next level. But let’s not forget that there are many other innovative nonprofit organizations that will never catch the eye of the Social Innovation Fund, or their funding and consulting counterparts.

Over the past 200+ years America has established a fairly advanced ecosystem that supports (albeit not perfectly) the growth and success of entrepreneurs at every stage of the game.  We are starting to recognize the need for a similar ecosystem in the nonprofit sector.  But there is still much work to be done. Let’s not forget the smaller, less sophisticated nonprofits that may have tremendous solutions to contribute, but who just can’t get past the many hurdles in their way.

Tags: Bridgespan, growth capital, Monitor, New Profit, nonprofit, nonprofit starvation cycle, philanthropists, Sean Stannard-Stockton, Social Innovation Fund, Social Velocity, Tactical Philanthropy, Venture Philanthropy Partners

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

Let’s Take a Step Back in the Outcomes Debate

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.

Tags: Gates Foundation, GIIN, IRIS, logic model, Mario Marino, Melinda Tuan, Nonprofit Almanac, outcomes, randomized control trials, social impact, Social Velocity, theory of change, Venture Philanthropy, Venture Philanthropy Partners

Constraint or Opportunity?

One of my favorite organizations and a critical player in the creation of a well-capitalized nonprofit sector, the Nonprofit Finance Fund, is seeking feedback.  NFF is a community-development fund that makes millions of dollars in loans to nonprofits and pushes for fundamental improvement in how money is given and used in the sector. Last March they published the results of a survey about how the recession is affecting the nonprofit sector.  They plan to conduct a similar survey this spring, and, in a bow to crowd-sourcing and transparency, are soliciting feedback on questions to ask in this year’s survey.  They are soliciting this feedback through comments left at the Tactical Philanthropy blog.

Last year’s survey was a good one, but a key element was missing.  The survey focused solely on the challenges that the  recession brought. Question after question had a similar pessimistic, constraint-filled theme. For example the only options available to a survey respondent in the question “To successfully weather the current economy, please check all actions below that you have taken in the last 12 months or are planning to take in the next 12 months” were negative.  The options assumed that the recession provided only challenges, not opportunities, to nonprofits. The possible responses were:

• Develop a ‘worst case scenario’ contingency budget
• Reduce staff or salaries
• Freeze all hires and current staff salaries
• Reduce staff hours (short weeks, furloughs, etc.)
• Reduce staff benefits
• Reduce or eliminate programs
• Collaborate with another organization to provide programs
• Collaborate with another organization to reduce administrative expenses
• Merge with another organization
• Reduce or refinance occupancy costs
• Sell assets such as a building or securities
• Use reserve funds
• Delay payments to vendors
• Speed up the collection of receivables
• Engage more closely with your board through more frequent reports and meetings when necessary
• Hold conversations with funders to explain your situation and projections and/or to discuss the use of currently restricted grants

19% of respondents said “none of these” or “other.”  I’m curious about those respondents.  Is anything innovative going on there?  Maybe, maybe not, but is anybody asking?

In the business world, examples abound of companies that capitalized on a recession to gain market share, snap up talented employees from their competitors, create a new product or service, and so on.  Are there really no examples of innovation in the face of adversity in the nonprofit sector?  Or are we so mired in the charity mindset to think that innovation in the nonprofit world is not possible, particularly when economic times are tough.

I understand that this survey was primarily intended to uncover the financial situation of the nonprofit sector, but was there really no room to understand any potential opportunities the recession afforded and how nonprofits might be  capitalizing on those opportunities?  I don’t mean to be a Pollyanna in the midst of a dire situation, but if we continually throw pessimism and constraint at the nonprofit sector doesn’t it make sense that they will continue to feel constrained and pessimistic?  Is there a possibility that some innovation exists out there?  Perhaps there are examples of nonprofits who bucked the trend and took the recession head on, revamping their approach to the social problem they are working on, or the funding of their operations, or the delivery of their services, or their response to competitors.

Let’s uncover the Southwest Airlines (creator of the “Grab Your Bag, It’s On” anti-recession ad campaign) of the nonprofit world who are taking the recession by the throat, making some bold moves, and innovating amid constraint.

We’ve seen it here at Social Velocity.  One of our clients, Heart House, an after-school program for at-risk children, decided last year to kick their vision for growth into gear, despite the recession.  The program, currently serving 500 kids in Austin and Dallas, knows they have a great, scalable model, so they put together a growth plan to go statewide.  Social Velocity helped them refine the plan and create an investor pitch around it, and they went out to raise $1.5 million in growth funding, recession be damned.  A few months into their campaign they’ve already raised a third of the money.  They don’t sit around talking about constraint and the horrible economy, yet they are feeling the pinch just like the rest of us.  They seized the opportunity:  when funders have nonprofit after nonprofit coming to them begging for money to get by, Heart House talks about something completely different.  They are talking about big plans, a grand vision, results and a way to scale those results, a way to solve Texas’ afterschool problem.  And funders are intrigued.

Let’s uncover those stories. Let’s hold them up as an example of how constraint can breed innovation.  That’s inspiring.  That’s encouraging.  That’s bold.

Tags: Heart House, Nonprofit Finance Fund, recession, Social Velocity, Southwest Airlines, Tactical Philanthropy

A New Social Innovation Project Comes to Texas

There is something underway in Texas that I’m pretty excited about.  The OneStar Foundation, the Texas state office of nonprofit capacity building and social innovation and administrator of the state’s AmeriCorps grant, has just launched a new project called the Texas Social Innovation Initiative (TSI). TSI is a partnership with Root Cause, a national organization supporting social innovation and headquartered in Boston.

The TSI creates an opportunity and a marketplace for socially innovative nonprofit organizations to present a compelling case for support to scale their programs.  OneStar will pick six nonprofit organizations in the Dallas/Fort Worth area to receive consulting, networking and other assistance to create an investor pitch for growth capital to scale their results-driven program. The award for each nonprofit totals about $25,000 in money and services.  The project is modeled on Root Causes’ Social Innovation Forum, where nonprofits are given strategy consulting, executive coaching, and introductions to social investors.  Their goal is to “build a philanthropic investment community that will invest and re-invest resources based on performance, in order to increase progress in solving pressing social problems.”

OneStar’s TSI will similarly offer this introduction to social investors when the project culminates in June with a Fast Pitch event where these six nonprofits will present their growth pitches to Dallas Social Venture Partners and other individuals with money to invest in nonprofits.

Aside from the fact that it is so exciting to see this kind of social innovation activity in Texas, I’m particularly excited about this project because Social Velocity is involved.  We helped to review applications (which were amazing by the way–I was so impressed with what these nonprofits are accomplishing) from the 60+ nonprofits who applied.  And Social Velocity will be one of the consultant teams working with the six nonprofits to craft their growth plans and pitches.  I love helping a nonprofit organization take the results they are achieving  and translate those into a compelling ask of people who have money to invest.  Bridging that gap between work that creates social change and those who have money to invest in social change is a thrilling experience.

The six social innovators that will participate in this year’s TSI will be notified by OneStar today, and announced publicly at the Governor’s Nonprofit Leadership Conference on December 9th.  The work crafting their pitches will begin in January.  If the project is a success, there is potential to expand it to other parts of the state.  That would be amazing.  I’ll let you know how it goes.

Tags: Dallas Social Venture Partners, Fast Pitch, Governor's Nonprofit Leadership Conference, nonprofit, OneStar Foundation, philanthropic investment, root cause, scale, Social Innovation Forum, social investors, Social Velocity, Texas Social Innovation Initiative

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

Making Donors Organization Builders

The “starvation cycle” of nonprofit organizations doing more and more with less and less has to end.  But how can nonprofit organizations break out of this cycle when donors won’t fund nonprofit capacity?

The news last week that the Boston Foundation will shift the majority of their competitive grants to unrestricted operating support, which in reality means capacity building, is fantastic.  The Boston Foundation is one of the few foundations that understands that strengthening nonprofit organizations, through money to support technology, infrastructure, fundraising, top talent, management expertise, strategic planning, evaluation, research and development, is absolutely key to making social change possible.

But the Boston Foundation is just one in a sea of foundations and individual philanthropists who have yet to understand the importance of money to build nonprofit organizations.

But perhaps there is hope.  Social Velocity has seen some great early signs that when approached in the right way, foundations and individual donors, who previously may have only provided direct service funding, can become organization builders.

I have discussed before Social Velocity’s work to help Heart House, an after-school program for at-risk kids in Austin and Dallas, strengthen their plan to grow statewide and create a pitch for growth capital.  Heart House could not pay for this planning work through their operating budget, so they went to a foundation that was already supporting their program and asked them to invest in this growth planning.  When the foundation understood that a small investment in organization building would help this organization that they love improve the lives of even more children, they were happy to invest.

Another example is Social Velocity’s newest client, English at Work, a nonprofit that teaches ESL classes to the employees of restaurants and hotels.  English at Work is a subsidized social enterprise where the hotels and restaurants pay them a fee to run these classes.  The nonprofit is demonstrating great results and has real potential to replicate the model.  First, however, they need to strengthen their overall revenue function to position them for growth, which is where Social Velocity comes in.

But again, English at Work didn’t have the operating revenue to pay for that outside expertise. So they approached a foundation in their fold and made the case for how a strengthened revenue function would put English at Work in a position to start planning for replication. And that replication would mean that their results-achieving model could provide more people with stronger English language skills.  Stronger English language skills mean better, higher paying jobs, less stress on the social safety net and a stronger, healthier community.  And what English at Work helped their donor understand is that to get to that positive outcome, English at Work as an organization has to be more effective.  They have to learn how to create a stronger, more sustainable revenue function that can support a larger organization over the long term.  And figuring that out costs money.

Some foundations and individual donors are more predisposed to understand the connection between stronger organizations and greater social impact.  But those donors are in the minority.  It is fabulous when a large donor like the Boston Foundation makes a dramatic shift toward organization building.  That will certainly help raise awareness among the philanthropic community about organization-building investments.

But perhaps another route toward more philanthropic money invested in organization building is if nonprofit organizations start approaching the donors and board members who are already supporting their programs and make the case, in an articulate, reasoned, but passionate, way that in order for more of the outcomes they seek to happen, they have to invest in their organization.  And they need those closest to the organization to make those investments.  It is a process of educating those nearest and dearest to the organization about the power of a stronger internal organization.  It’s a new conversation, but an important, and potentially game-changing, one.

Tags: Boston Foundation, capacity, English at Work, Foundations, Heart House, nonprofit, organization-building, Philanthropy, Social Velocity, starvation cycle