This piece originally appeared on Stanford PACS.
Innovation in social entrepreneurship is critical to solving the world’s most pressing social problems, such as rising inequality and persistent poverty. The good news is that in recent years, the sector has seen an explosion of innovation, with rigorous methods like human-centered design leading to more testing of pilot projects, the development of solutions that are more responsive to the needs of beneficiaries, and the implementation of better methods of measuring actual impact. Yet as Johanna Mair and Christian Seelos point out in a comprehensive review of non-profit innovation practices, many mistakes are being made. Too many organizations are devoting too much of their scarce time and money to flawed ideas, aren’t abandoning approaches quickly enough that fail to produce results, or, on the flip side, aren’t allowing enough time to test for results and then modify programs to improve them.
Philanthropists can play a critical role in fostering more effective innovation. But many donors are reluctant to play an active part in funding innovation, in part because they consider themselves ill-equipped to evaluate the risks involved and whether they are worth taking. They also aren’t confident that they can identify which organizations are best prepared to manage the process successfully. Additionally, many funders categorize innovation as an overhead expense rather than a program expense, and their policy is not to fund overhead. As a result, donors often default to funding programs that have already proven their impact, leaving minimal financial support for critical research and development.
So how can philanthropists do more to support innovation? Here are some key lessons I have uncovered in my conversations with leading experts in the field:
This piece originally appeared on SSIR.
Great ideas for social impact are dying on the vine because organizations lack the tools they need to grow. With the right strategies in place, any nonprofit can lay the foundation for success.
I have had a front-row view of the boom under way in social entrepreneurship. As a social entrepreneur myself and a lecturer in the Program on Social Entrepreneurship at Stanford University, I have watched the launch of so many exciting innovations for good. And yet, while for many nonprofits this has been an invigorating and transformative time, so many other nonprofits, have struggled on the sidelines. Despite doing important work, many operate in constant survival mode, scrambling for the money to make payroll every month. In 2014, almost two-thirds of reporting public charities in the United .States. had an annual budget of less than $500,000.
For the past five years, I have been traveling around the country, visiting the founders, leadership teams, and funders of dozens of what I call breakthrough social startups. I’ve interviewed over a hundred social entrepreneurs, academics, and philanthropists, both newcomers and veterans in the field, including the leaders of Teach for America, City Year, DonorsChoose, and charity: water, and started our conversations with a simple question: “What is the key to nonprofit success?” Social Startup Success highlights the findings of my study in the form of a playbook for any organization that wants to grow increase its impact.
In these uncertain times, when so many social problems are not only persisting, but in many cases, worsening, we need every bit of creativity and determination to find better solutions. My hope is that the stories you read in this book and the tools it recommends will help you to make your own organization, or those you are supporting, thrive. We need to spend less energy keeping organizations alive, so that we can devote more energy to spreading positive impact. This book is a guide for how to achieve do that.
Attracting funding is by far the biggest barrier to scale. In fact, 81 percent of the social entrepreneurs I surveyed identified access to capital as their most pressing problem. Nonprofits at all levels struggle to get noticed by new funders. What separates the best organizations is a culture of testing a variety of funding streams to figure out what works. By purposefully experimenting with revenue, they discover a funding model both authentic to their mission and effective at raising money.
Earned income such as selling products or services is fertile ground for experimentation. My survey revealed that successfully developing an earned-income strategy was one of the ways organizations broke through the $2 million annual revenue barrier. The responses showed that while organizations typically start out with mostly philanthropic support, with just 8 percent of their budget coming from earned income, as they grow past $2 million in revenue, they are more likely to report that a higher percentage of their budget is covered by earnings; on average about 30 percent. These findings indicate that testing earned-income strategies should be a key ingredient of efforts to scale. But my research into how nonprofits generated earned income also highlighted that the process is fraught with challenges, and is more viable in some subsectors, such as education and health care, than others.
The vast majority of organizations under $3 million in annual revenue will rely on a combination of funding sources to come up with a model that fits their unique mission and values. In one of the most widely read Stanford Social Innovation Review articles, titled “Ten Nonprofit Funding Models,” William Foster and his Bridgespan colleagues reveal that of the 144 nonprofit organizations created since 1970 that have grown to $50 million a year or more in size, each grew by more narrowly pursuing sources of funding, typically concentrating on one particular source: what they call the “natural match.” For example, the Sierra Club relies on membership fees.
A key point to highlight, however, is that their research also shows that organizations typically do not begin to transition to dominant funding sources until around $3 million in annual revenue. This underscores the point that while organizations that want to scale substantially should be driving toward finding one or two primary sources of reliable ongoing revenue, they should get there by testing a good diversity of approaches as they’re growing.
Many of the organizational leaders I interviewed remember the great recession of 2008 like it was yesterday. Virtually overnight, foundations that had promised multiyear grants reneged on their funding because their endowments had tanked along with the Dow Jones. Earned income was critical to many of them in order to stay afloat. Beyond providing a financial cushion, earned income helps bridge the gap lying before so many organizations: the funding they’re able to raise versus the amount they need in order to invest adequately in growth. Another benefit is that demonstrating your capacity to generate reliable income appeals to funders, many of whom have come to see earned revenue as a vital part of the “path to sustainability.” But before an organization begins playing with potential earned-income streams, it must establish the right expectations.
Take the case of successful Hot Bread Kitchen, a training facility for low-income women who want careers in the food industry, founded by Jessamyn Rodriguez. She smartly played to her strengths in conceiving the organization, after having worked for a decade in international development before she came up with the concept. A passionate foodie, she landed an internship in renowned chef Daniel Boulud’s kitchen. That happened by serendipity. She was interviewing for a job at a microfinance organization called Women’s World Banking, when a friend misheard her as saying Women’s World Baking. The idea of an international women’s baking collective struck her, and it is now located in the heart of Harlem in La Marqueta, a historic produce market dating back to 1936, which had fallen into decline until the organization redeveloped it. The space is divided into three separate areas of operation: a kitchen that hosts a six-month job-training program for low-income women, an area where they bake bread products for sale and an incubator where small-business owners in the food industry can rent space to make products they sell throughout the city, from grocery stores to markets.
Rodriguez told me the key reason the business has been successful is that they don’t sacrifice quality despite the fact they are mission driven, and after tasting their multigrain pepita bread I can attest to that. In fact, the organization sells its bread to a number of major retail outlets, such as Whole Foods and JetBlue, as well as some of the top restaurants in New York City. But even with a top-quality product and a strong personal network for building the market, she initially overestimated the extent to which profits from bread sales would support the organization. While at first she envisioned a model where her bread sales and cafe operations would cover close to 100 percent of her operating expenses, she realized quickly that goal would be hard to accomplish. She had underestimated the costs of the training, and overestimated the profit margins on selling bread. She was forced to reset her expectations, and had to go back to her donors with a new model that would continue to rely on philanthropic donations to support 35 percent of the program budget. Rodriguez told me that “in talking with our donors, I realized that people were attached to our strong outcomes and that was most important, not being 100 percent sustainable. Over time, my understanding of the economics of the business have changed a lot,” she told me, “and I realized that there is actually a huge benefit that comes from philanthropic funding that allows us to do more for the women we serve, such as providing child care during the classes.”
Foundations and donors, and organizational leaders themselves, must not put organizations under unrealistic pressure to fund more and more of their operations by selling products and services. Recall that in my survey, most of the organizations that had scaled to over $2 million in annual revenue reported that earned income accounted for 30 percent, which therefore is a reasonable target for many organizations to shoot for during the initial phase of growth. The bottom line: plan on grants and donations to almost entirely sustain your efforts for at least the first couple of years, as you experiment with building your revenue stream.
If you decide you want to experiment with earned income, you should undertake a rigorous strategic analysis and a pilot program. Here is a five-step process for developing a viable earned-income strategy I highly recommend:
Step 1. Reaffirm your organization’s mission. Earned-income strategies work best for nonprofits when they are highly aligned with their mission. To assure that ideas are serving the mission well, you should perform an assessment of how clear your mission is by asking five or so people (a mix of staff and other stakeholders such as a board member and a funder) to describe the mission, without referring to your website or materials describing it. You could do this with a simple email request or perhaps by calling them. The responses will tell you whether or not you should spend some time aligning everyone on the objectives of the organization. Going through a theory of change is another way to ensure you have clearly articulated your organization’s goals.
Step 2. Brainstorm your options. Bring together your full team (staff, board and even external stakeholders) to brainstorm a variety of potential sources of income, and whittle them down to just a few to evaluate further. Think about the various categories of revenue. Can you charge your beneficiaries for services you already provide? Is there an invested third party such as a company or a government entity that might be willing to pay for those services? Does it make sense to launch a new business venture? What other types of revenue relationships can you form in your network?
Step 3. Assess total mission impact. Evaluate whether the proposed activities are likely to enhance or detract from the pursuit of your goals, and assess the potential net financial gain (or loss) of each idea.
Step 4. Evaluate feasibility. Analyze the internal capacity of your organization to conduct the required activities, considering whether you have the human resources and necessary experience, the financial stability and the appetite for the risk involved, as well as the likely demand for your products or services. Then assess likely funder support, which might involve making some calls to trusted funder advisors.
Step 5. Develop an action plan. Develop a design for a pilot program, following the steps for testing outlined in human-centered design. Solicit feedback about the design from professionals with experience in nonprofit earned-income programs as part of your testing process, perhaps by working with a paid or pro bono consultant, and also be sure to seek the advice of an attorney to assure you fully understand the tax implications.
12/19/2017 0 Comments
This piece originally appeared on Linkedin.
As we near the end of the giving season, are you overwhelmed by the number of nonprofits doing amazing work out there? Not sure which ones are having the most impact or which ones to support? After having the pleasure of interviewing over one hundred phenomenal nonprofits for my forthcoming book, Social Startup Success, I can relate to the fact that these decisions are not easy.
To help you sort through the noise, I’ve compiled a list of some of my own personal favorites, whose stories I feature in the book, and which you might consider supporting through your end of year giving in 2017:
No matter who you choose to support, remember that we all have the capacity to make an impact in this world, no matter how big or small. Nonprofit leaders everywhere rely on your donations to do their important work to alleviate suffering in this world, so thank YOU for fueling the fire of generosity to support them!
This piece originally appeared on SF Chronicle.
In a time that can feel so politically divisive, where we are often cast as red or blue, urban or rural, have or have not, it can feel like there’s more that divides us in this country than unites us. But in the aftermath of the most devastating fires in California’s history, having seen the awe-inspiring outpouring of support for people who are complete strangers, I am reignited with hope that our humanity burns stronger than any disaster or political affiliation.
The night of Oct. 8, like so many others, I awoke in my home in San Francisco to an overwhelming stench of smoke, convinced that our house was on fire. After going room to room to check on each of my children, I noticed that my phone was lighting up with texts from my family. I soon learned that the fire was actually more than 50 miles away in my childhood neighborhood in Napa, which had burned to the ground just minutes earlier.
In the week that followed, with the fires burning out of control, I was consumed with stories of my family and close friends, as well as the stories of so many people I did not know: the man who held his elderly wife in a swimming pool while she died, a nurse who evacuated patients from the Santa Rosa Hospital while her own home burned to the ground just a mile away, countless hourly wage workers whose jobs were put on hold for weeks, and immigrants who lost their legal papers in the fires.
The need was overwhelming, but so was the call to do something about it.
I’ve spent my entire career raising money for those who are most vulnerable; it’s not easy. But when the Wine Country fires occurred, people didn’t hesitate. I didn’t have to send out multiple emails, remind people or give a second plea for help. Everyone said yes, and many took it upon themselves to ask others to join the effort.
The flood of support from communities around the Bay Area and around the country has been remarkable. The Petaluma Mothers’ Club put out a call on Facebook that it was raising funds for $25 gift cards to distribute at local shelters, and money poured in from mothers around the country. The group has raised nearly $40,000 for families that lost everything.
San Francisco chefs from top restaurants and food purveyors like Delfina, Jardiniere, Liholiho Yacht Club, State Bird Provisions and Bi-Rite Market rallied together to provide 35,500 fresh and delicious meals in the North Bay in less than two weeks, also raising more than $50,000 for relief efforts.
Tipping Point Community, an organization that fights poverty in the region, held a benefit concert in partnership with big tech companies like Salesforce and Twilio that raised $17 million to support organizations that are serving low-income communities hardest hit by the fires.
But it wasn’t just the fundraising that inspired people to give, it was the unrivaled heroism and outpouring of compassion across the community.
On the Move, a North Bay nonprofit that helps support vulnerable young people, many of whom have been through the foster care system, worked tirelessly to locate all 800 program participants within 24 hours. A man used his own bulldozer to build fire lanes to save his neighborhood. A woman donated tools to help an ironworker who’d lost everything get back to work.
What these tragic fires have taught me is that in moments of disaster, we don’t see the lines that divide us. We see the humanity that brings us together.
Fire doesn’t discriminate between rich or poor, left or right, black or white. And just as inspiring as the universal need of those impacted by these fires were the unconditional acts of kindness and courage offered by so many people from every profession, faith and persuasion.
As the cleanup from the Wine Country fires continues and the Southern California fires burn, Gov. Jerry Brown has urged us to accept wildfire as the “new normal” in California.
What if we chose generosity as the “new normal” instead?
What if we could surrender our dividing lines and come together to begin putting out the fires of homelessness, hunger and injustice we witness on a daily basis in the Bay Area and across this country?
The problems that lie before us require all hands on deck. If we can fuel the fire of generosity — that’s something I’m committed to fighting for.
Kathleen Kelly Janus is a social entrepreneur, author and lecturer at Stanford University. She is the author of “Social Startup Success: How the Best Nonprofits Launch, Scale Up and Make a Difference” (Da Capo Press, 2018). To comment, submit your letter to the editor at SFChronicle.com/letters.
This piece originally appeared on GoodReads.
In these uncertain times, when so many social problems are not only persisting, but in many cases, worsening, we need every bit of creativity and determination to find better solutions. The good news is that we can all play a part to make the world a better place. These books both inspire us as well as provide practical tools that we can all use to give back to our local and global community.
1. The Promise of a Pencil: How an Ordinary Person Can Create Extraordinary Change, by Adam Braun
In this gripping story, Braun recounts how one interaction on a study abroad trip completely transformed his life. This book is an inspiring guide for how to transform serendipity into action.
2. The Deepest Well: Healing the Long-Term Effects of Childhood Adversity, by Nadine Burke Harris
A remarkable account of Dr. Burke Harris’s journey to find a cure for toxic stress in children, and a compelling case for how we can all be advocates for the rights of children.
3. I am Malala: The Girl Who Stood Up for Education And Was Shot By The Taliban, by Malala Yousafzai
A extraordinary story about a girl who took a stand for what was right, and inspired a generation of women and girls globally by her actions.
4. The Life You Can Save, By Peter Singer
Peter Singer reminds us that eradicating world poverty is within our reach, and makes a strong case for why we should all be doing more for those who are suffering most in our world.
5. Giving 2.0, by Laura Arrillaga Andreessen
By showing us the full gamut of the ways that we can give back with lively stories and practical advice, Laura Arrillaga Andreessen reminds us that giving starts with all of us, right now.
About the Author
Kathleen Kelly Janus is a social entrepreneur, author and lecturer at Stanford University. She is the co-founder of Spark, the largest network of millennial donors in the world. Based in the heart of the Silicon Valley, her forthcoming book, Social Startup Success, features best practices for early stage nonprofit organizations based on a five-year research project interviewing hundreds of top-performing social entrepreneurs.
This piece originally appeared on LinkedIn.
Feeling bogged down by holiday stress? I’ve got the perfect solution for you: walking meetings. When I recently reached out to Beth Kanter, the guru of social change in the digital age, she immediately wrote back and suggested we meet at “The Dish” – a radio telescope in the Stanford Hills where soccer moms, academics, and marathon runners alike meet to walk rolling hills with stunning views of the Silicon Valley. As it turns out, walking meetings are Beth Kanter’s thing, and they are my thing now, too.
Kanter’s latest book, The Happy Healthy Nonprofit, with co-author Aliza Sherman, reveals a wealth of strategies just like the walking meeting, all for making an impact while avoiding burnout – a notorious feat for passion-driven nonprofit leaders. In their book, Kanter and Sherman describe how scarce funding in the nonprofit sector has led to a culture where nonprofit leaders work themselves into the ground for the causes that they care about so deeply. According to The Foundation Center, only 0.03 percent of the sector’s $1.5 trillion in annual spending goes to leadership development, leaving hardly any emphasis on self-care!
The Healthy Happy Nonprofit is a lively, practical, feel-good guide, the perfect antidote to the burnout problem. As a working mom of three, I admit to often burning both ends of the candle to get everything done, so I’m always looking for ways to take better care of myself. On a recent getaway, I devoured the book in a single sitting, and I’m confident that anyone who reads this book will come away with several nuggets for how to improve their quality of life, and make a better leader for their team. After soaking up so many great ideas from The Healthy Happy Nonprofit, here are some of the ways I’ll be practicing better self-care, starting now:
This piece originally appeared on LinkedIn.
Mark your calendars: November 28 is #GivingTuesday, a nationwide online campaign the Tuesday after Thanksgiving, when nonprofits solicit donations to kick off the holiday charitable giving season. Many nonprofits are wondering how they can get their boards of directors off the sidelines and involved in the fundraising process.
The best organizations know how to get their boards to raise money for them. This is an important morale booster for leaders, who feel more supported by their boards, as well as a major source of financial support for their organizations. But data shows that getting boards involved in fundraising is hard. In my survey of over 250 nonprofit social entrepreneurs around the country, only 15 percent reported their boards were involved in fundraising, with 66 percent saying they wished their board would help more on fundraising. This is a huge disconnect.
The #GivingTuesday campaign is a great way to kickstart your board’s participation in fundraising by giving them some easy and tangible ways to support your efforts. Here are five ideas for how to get your board to step up on #GivingTuesday:
1.Set a #GivingTuesday goal with your board. If you want your board to help raise money on #GivingTuesday, you have to be clear about your expectations. Engaging your board in the goal-setting process gets their buy-in early and sets realistic expectations about what you expect from each board member. The goal may be monetary, it could new donors, or it could simply be 100% board participation. What’s key is that your goal is specific and in writing.
2.Ask your board to match #GivingTuesday gifts for new donors. One easy way to get your board members involved is to ask them to match any new donations that come in on #GivingTuesday. This not only incentivizes new donors to support to your cause, it also increases the amount you raise, a win-win. Create buzz about the matching gift by announcing it a week before the campaign and get your board members involved in spreading the word.
3.Give board members fundraising tools. Even if board members know what the expectation is, they may not have the tools they need to meet that goal. It’s important to support your board throughout the #GivingTuesday campaign, such as by providing sample tweets, a template email ask that they can personalize and send to their networks, as well as some prompts for in-person conversations.
4.Get creative on social media. Think about ways that you can make things fun to get the most out of the campaign. For example, have each of your board members share a photo of themselves with a placard saying “I give because…” with the hashtag #GivingTuesday. Or have them make a quick video on their phones about why they got involved with your cause. These can be tools not only for your board members to share with their own online communities, but as an organization it can also be a great way to show your audience that your board is supportive.
5.Keep a Progress Meter. It’s important that you keep tabs on your board members leading up to #GivingTuesday as well as on the day of so that you can make sure they are on track to meet their goal. Creating a Thunderclap or a Fundly campaign is an easy way to allow everyone to track progress online, or you can just update them manually by email. You can even spice things up by creating a little competition amongst board members to see who is ahead, and call out big wins such as major gifts that come in throughout the campaign.
Helping your board to participate in #GivingTuesday isn’t just about increasing board participation in your holiday fundraising efforts, although that is an important byproduct. It’s about providing a vehicle that will help engage the board in an easy way, which will fuel a culture of fundraising on the board to support the organization for years to come. So make sure that your board doesn’t sit on the sidelines on November 28th. Help them help you reach your #GivingTuesday goals!
This piece originally appeared on the Echoing Green Blog.
Last month’s Echoing Green Summit brought together over 400 funders, academics, politicians, and business and nonprofit leaders to discuss some of the top challenges we face in social change today, such as civic engagement, combatting bias, and addressing climate change. At the Summit, I got the chance to talk with dozens of Echoing Green’s Fellows and asked them what their most important piece of advice is for nonprofit leaders working to scale their organizations, which is the topic of my forthcoming book, Social Startup Success. I found that a number of them highlighted these key points:
1. Stay True to Your Mission – With so many competing demands for time, from fundraising to staff development, as both Echoing Green president Cheryl Dorsey and Rob Gitin of At The Crossroads, which serves homeless youth, pointed out, keeping your focus on the mission can be a tricky challenge. But putting the mission front and center in all of your decision-making will steer you away from common pitfalls, like developing too many programs and losing focus on your core goals, and will also be an invaluable guide in your daily prioritizing.
2. Build A Team – Founders tend to get the spotlight, but as Alan Khazei, founder of Be The Change, which builds coalitions to promote causes, told me, “No one changes the world by themselves. You have to find a partner and build a team.” That might mean looking for a co-founder, or, as I found many successful leaders have done, bringing in high-level staff, such as a Chief Financial Officer or Head of Programs, early in the building process. As Gemma Bulos, of Global Women’s Water Initiative, which trains African women in the water, sanitation and hygiene sector, emphasized, strong team leadership requires humility and willingness to ask for help. One good way to reach out for advice is to hire a leadership coach. Carolyn Laub, founder of Gay-Straight Alliance Network, recommended that “working with a coach to do internal self-reflection makes us better leaders.”
3. Think Big Even When You’re Small – As I also found in a research study about scaling, several leaders stressed that setting one’s sights on bold ambitions, right from the start, is key to sustaining the creativity and drive that are required to persist through the many inevitable setbacks and disappointments of early-stage growth. Felecia Hatcher of Miami-based Code Fever, which teaches people in underrepresented communities to code, said thinking in terms of abundance as opposed to scarcity is key to success. She reminds us, “You can make money and have social impact. Often, when you set your heart on this work, you think you need to struggle through it and give from scarcity rather than abundance.”
4. Don’t Over-Plan – Founders often think they need the perfect plan or just the right amount of funding before they launch an organization. As Laura Weidman Powers of Code 2040, which works to increase diversity in the tech sector, told me, instead you should “just get started.” She and many other leaders highlighted that the best insights about how to grow an organization come from actually doing the work, starting to collect data, and learning from the process. Darrell Scott of Push Black, a mobile-based organizing group that activates Black voters through daily black history and news stories, particularly stressed the importance of the testing process in improving a business model, “Everything can be tested. It helps us make critical decisions, and it helps us save money.”
5. Be Patient and Practice Self Care – Finally, it’s important to remember that social change is a marathon, not a sprint. As Rey Faustino of One Degree, a Yelp-like platform for finding social services, told me, it’s important to be aware that “the journey is long and hard,” and leaders must work into their schedules time to rejuvenate. Kathryn Finney of digitalundivided, which provides support to Black and Latinx women founders of tech companies, says she carves out regular time to do things apart from work that give her joy, such as pursuing her life-long dream of becoming a lifeguard, and she makes sure to spend quality time with her family. She wisely told me, “The work can’t be done if you’re not able to do it.”
A new generation of wealth is making a difference using powerful technology, inventing new financial models to better leverage capital, and rigorously focusing on getting proven results.
This piece originally appeared in the Stanford Social Innovation Review.
As former Carnegie Corporation president John Gardner once said “Wealth is not new. Neither is charity. But the idea of using private wealth imaginatively, constructively and systematically to attack the fundamental problems of mankind is new.”
In the 20th century, titans of American industry including Andrew Carnegie, Henry Ford, and John D. Rockefeller helped professionalize philanthropy, pioneering the creative use of wealth to solve social problems. Today, a new set of leaders are helping the field tackle social and environmental problems while pushing the limits of innovation, and often leveraging the very types of approaches that led to their financial success in the first place. At the recent Stanford Center on Philanthropy and Civil Society Philanthropy Innovation Summit, many of these leaders revealed how they’re using powerful technology, inventing new financial models to better leverage capital, and rigorously focusing on getting proven results to maximize their impact.
Once considered charity, philanthropy has been redefined as experimentation capital for the public sector. On the one hand, critics may claim that this unchecked power by some of the wealthiest members of our society is undemocratic. In challenging whether foundations that exist in perpetuity that are “unaccountable except to a hand-picked assemblage of trustees” is compatible with democracy, Stanford professor and scholar of philanthropy Rob Reich, highlights that one of the most important roles of philanthropic capital is funding “extra-governmental democratic experimentalism.” Philanthropies have been taking the lead in piloting risky, unproven approaches to tackling many of the most difficult social problems. Take the example of the $100 million education fund launched by Netflix founder Reed Hastings, which has supported the development of a range of innovative approaches to improving education, such as the Knowledge is Power Program (KIPP), a national network of charter schools. KIPP has rigorously assessed efforts such as ways to better integrate technology into classrooms, and is now sharing lessons learned with the public education sector.
Microsoft Co-founder Paul Allen founded the Allen Institute for Brain Science to take a “high-throughput” approach to cell science research, funding a large volume of experiments that incorporate cutting-edge technologies like laboratory robots.
And as an approach to solve the decline in jobs due to technology and ultimately eradicate wide-scale intractable poverty, eBay Founder Pierre Omidyar and Facebook Co-founder Dustin Moskovitz and his wife Cari Tuna have both funded Give Directly. The nonprofit is piloting a Universal Basic Income project in Kenya that will provide 26,000 people with a modest income for 12 years and evaluate the outcomes.
Many organizations are using sophisticated new data analytics tools. Palantir, a leading player in the booming field of “big data,” has made its massive data gathering and computing power available to nonprofits, such as Mercy Ships, which is using analytics to anticipate large-scale refugee crises, allowing the organization to better prepare for distribution of relief supplies like food and water. Analytics are also being applied to much more rigorous evaluation of program effectiveness. GiveWell, for example, conducts in-depth data-based research in order to determine the social good generated with each dollar spent on programs, publishing that information on its website to help donors make better decisions about where to allocate their funds.
The use of data by nonprofits to strengthen democracy and promote civic action has flourished, creating a vigorous “digital civil society,” as it’s been dubbed by the Stanford Center on Philanthropy and Civil Society, which is championing the direction of philanthropic funds to data security for advocacy organizations, to protect their clients and staff.
Creative new forms of philanthropic financing are being developed, leveraging the power of market-based business models to address social problems. The Bill & Melinda Gates Foundation has made equity investments in the pharmaceutical industry on a for-profit basis, which develops drugs they then distribute through nonprofit organizations, in order to both advance the development of medications and improve their distribution to the poor. And the Omidyar Network, founded by Pam and Pierre Omidyar, which describes itself as a philanthropic investment firm, has furthered the cause of impact investing–the investment of funds for the dual purposes of furthering the social good and earning financial return. Omidyar developed a model for diversifying investments across a spectrum from successful commercial ventures, to “subcommercial” ones, which are having significant social impact but are not yet profitable, to the giving of grants, which it calls its “returns continuum framework.” Like Omidyar, Emerson Collective, founded by Laurene Powell Jobs, has applied a portfolio management philosophy to its financing of organizations, diversifying its contributions across an array of nonprofits, social enterprises, and fellowship programs.
Venture philanthropy—applying a venture capital funding model to the nonprofit sector—is another new way that business models are being used to support social entrepreneurs. The Draper Richards Kaplan Foundation, founded by venture capitalists William Draper and Robin Richards Donohoe, later joined by former Goldman Sachs Vice Chairman Robert Kaplan, has pioneered the application of the venture funding model to philanthropy. The Foundation provides early-stage financing to organizations, rigorously selecting them based on their growth potential and impact, and as venture firms do, also takes an active role in guiding the future of the organizations, mentoring their leaders and taking seat on their boards.
Another frontier in philanthropy is the redirection of efforts making up for deficiencies and inequities in economic and social systems. As Ford Foundation President Darren Walker wrote in his 2015 annual letter, “Toward a new gospel of wealth,” Ford is refocusing its efforts to address failures of the market system and “foster a stronger safety net and a level playing field.” Arguing that other philanthropic organizations broadly adopt this mission, he quotes Martin Luther King, Jr., who said “philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.”
Other organizations are addressing the philanthropic sector’s own glaring inequities. Faced with the reality that approximately 95 percent of the $60 billion awarded each year by US foundations goes to White-led organizations, Leah Hunt Hendrix founded Solidaire, a group of philanthropists that supports grassroots organizations run by leaders from within under-resourced communities, with a particular focus on women and leaders of color.
With more than $373 billion in annual giving, or 2 percent of the US GDP, going to nonprofits, perhaps no mission is as urgent for the philanthropic sector as finding better ways to allocate those funds to optimize impact. The good news is that the sector has never been more innovative. The new pioneers of philanthropy are spearheading not only stronger leadership across the sector, but an explosion of interest among the up-and-coming generation of leaders in working hard to make the world a more just place.
9/15/2017 0 Comments
This piece originally appeared in the Stanford Social Innovation Review
The idea that nonprofits should develop a theory of change has been widely embraced in recent years, and funders have helped drive the momentum. In fact, many funders now require that nonprofits submit a theory of change document with grant requests for all the reasons Paul Brest outlined in his seminal article, “The Power of Theories of Change.”
But what is a theory of change exactly? It’s an articulation, whether in the form of an explanatory memo or a diagram, and often combining both, of precisely how an organization is going to achieve its objectives. A good theory of change details the causal links between an organization’s vision and its own programmatic activities.
Theories of change are popular with funding organizations, because they powerfully and efficiently explain why programs will lead to strong, measurable results. But funder demand is certainly not the only reason to engage in the process. Developing a theory of change really is a means of assuring that your organization is actually doing the right things in the right ways. I was reminded of this when I helped facilitate a theory of change workshop as board chair of Accountability Counsel, a San Francisco-based human rights organization. The process of tracing our programmatic activities to the ultimate outcomes we wanted to see helped us develop a clear set of key performance indicators that would allow the organization to determine whether what we were doing was actually making a difference.
The problem with the theory of change process is that many organizations don’t do it well. As a result, it doesn’t produce the kind of robust critique of programs and insights about improvements to make that it should. In my interviews of more than a hundred social entrepreneurs for my forthcoming book, Social Startup Success, I learned that many leaders struggle with the process. My research shows that to assure the process is as fruitful as it can be, organizations must set aside the time to hold a workshop (ideally an off-site) and bring a dedicated focus to the theory of change development. These five steps can help ensure that the process is successful:
1. Engage outside stakeholders. Organizations often fail to solicit the opinions of the full range of stakeholders in their mission. Beneficiaries, donors, nonprofit partners, and various kinds of experts, such as academics or practitioners, can offer vital input about how to make programs more effective. Engaging them also helps to generate support and buy-in for your programming. Organizations can facilitate participation by hosting workshops, and reaching out by phone or email. At Accountability Counsel, we couldn’t bring our global partners together to meet in person, so we enlisted board members to make calls to get their input. We then collated the feedback into a memo that we shared in advance of our workshop with local participants.
2. Include your board and staff. Founders and executive directors often craft their theory of change without the input of staff or board members—the very people who know the most about what your organization is doing and have made strong commitments to furthering your aims. Founders may be particularly reluctant to ask board members to participate in the process, due to fears about exposing weaknesses or seeming too demanding of their time. But my research showed that the more engaged an organization’s board, the more quickly the organization scaled. The theory of change process is a perfect opportunity to engage the board through one-on-one meetings or workshop. It gives you an opportunity to tap into their ideas more formally than in board meetings, and to educate them about your program and the challenges it faces. This, in turn, allows them to be more effective contributors.
3. Bring in an outside facilitator. The beauty of outside facilitation is that it helps level the playing field. It allows founders and their leadership team to participate rather than run the show, which helps assure staff and other participants that their input is genuinely desired. For our Accountability Counsel workshop, we recruited an executive from Intuit who enjoys helping nonprofits with their strategic planning on a pro bono basis. Other organizations I interviewed solicited the help of funders such as Arbor Brothers, a supporter of second-stage organizations that starts each of its partnerships by helping its grantees develop a theory of change. Board members or advisors can also make great facilitators.
4. Clearly define the outcomes that will spell success. Starting a workshop by projecting forward to what kind of outcomes your work will have is a flawed approach, because it starts with the assumption that what you’re doing is working. Arbor Brothers solves this problem by discussing the end results an organization hopes to achieve. They ask the basic question, “How will you know if you’re successful?” This helps them “design with the end in mind.”
The Coalition for Queens (C4Q), a nonprofit founded based in Queens, New York, successfully used this approach. The organization’s flagship program, Access Code, is a ten-month software development course that trains high-potential adults from underserved populations to become programmers. Early conversations with Arbor Brothers forced C4Q to get much more specific about the outcomes it hoped to see, which allowed it to clearly map the causal links between its work and its goal: a more robust Queens tech ecosystem. Rather than just setting a goal to increase participants’ starting salaries, it did extensive research to figure out living wages and starting salaries for engineers in New York City so that it could set specific targets. Today, C4Q can say with specificity that 85 percent of its participants will graduate and that within six months of graduation, 70 percent will secure a technical career-track job earning a minimum of $85,000 per year.
5. Track your results rigorously. I found that while most organizations are tracking some data, many are not tracking the right data or tracking it vigorously enough. You should use the theory of change process to help you craft a detailed dashboard for tracking outcomes. Allowing all staff members to access and update the dashboard leads to a richer understanding of the outcomes you’re achieving and areas that need improvement, and to greater transparency about your successes and problems. At Accountability Counsel, we went from trying to measure our progress with a lofty but vexingly intangible goal—to create a more-level playing field in disputes between grassroots communities and large corporations and institutions—to tracking a set of specific performance indicators in a dashboard on Google Docs that each staff member helps update. To really clearly highlight results, we use color-coding: green for indicators that are on track, yellow for slow progress, and red for no progress.
Theories of change can be an incredibly effective tool for refining your mission and your means of working toward it, as well as measuring your impact and proving your impact to funders and other stakeholders. It also helps ensure that you are maximizing your organization’s precious resources. Putting the time into doing it right is a wise investment that will serve your organization well for years to come.