“Since new developments are the products of a creative mind, we must therefore stimulate and encourage that type of mind in every way possible.”
~ George Washington Carver (1864-1943)
~ Someone who appreciates the sentiment conveyed in that quote is Sir Richard Branson, author of, “Screw Business as Usual” (Portfolio/Penguin: 2011). The book includes examples of several successful businesses ~ some owned or fostered by Richard through the Virgin Group, but not all ~ that do quite well financially by doing good socially and environmentally.
Nonprofit professionals should enjoy reading Richard’s “take” on what makes a business successful, and proceeds from the sale of the book support the work of the corporate foundation, Virgin Unite.
Virgin Unite has posted the first chapter of the updated book online (April 4, 2013): Screw Business as Usual – Read Chapter One.
And for those who are currently angry at capitalism, you might enjoy reading Richard’s blog article (May 23, 2012), “In defence of capitalism and entrepreneurs.”
HOW NONPROFITS EFFECT THE ECONOMY
~ Huff Post Impact (The Huffington Post) posted an infographic by the Rebecca Gordon Group in which you might be interested, “How Growing Nonprofit Sector Impacts Economy” (November 13, 2012).
~ Sarah Halzack has written a level-headed article for The Washington Post, “Can Nonprofit Organizations Boost a Regional Economy?” (February 10, 2013). “And while such enterprises are focused more on executing their mission than on raking in big money, they still consume goods and services just as a private sector company would. They also hold events and conferences, which can create spending and bring visitors to the county.”
~ You might want to follow CForward: Championing the Economic Role of Nonprofits, a national network of people who work in,volunteer at or donate to nonprofit organizations. Click on the link to review the website and to find their social media links.
~ Dan Pallotta challenges the fundamental premises underlying the charitable sector in, “Uncharitable: How Restraints on Nonprofits Undermine Their Potential” (Tuft University Press: 2008).
“By denying charity the tools of capitalism while allowing the for-profit sector to feast on them, we place charity at a severe disadvantage.” Dan notes, “We allow people to make huge profits doing any number of things that harm the poor, but prohibit anyone from making a profit doing anything that will help them. Want to make millions selling violent video games to kids? Go for it. Want to make a million funding the cure for childhood leukemia? You are a parasite.” Pallotta suggests that perhaps the fundamental principles underlying the nonprofit sector need rethinking.
You might also enjoy reading Dan’s latest book, Charity Case: How the Nonprofit Community Can Stand Up for Itself and Really Change the World (click to reach Amazon.com). In addition, I enjoy reading Dan’s blog on the Harvard Business Review. Here is a noteworthy post (January, 2013), “Business Can’t Solve the World’s Problems, But Capitalism Can.”
WEATHERING THE STORM
~ Trevor Neilson of the Huffington Post wrote a timely article in the “Impact” section, “What Roubini Just Said and Why Those Working in Philanthropy Should Listen” (July 11, 2012). Trevor suggests that in this uncertain economic climate nonprofits should think differently about fundraising, decide what not to do, and to value performance over passion.
“Non-profits need to embrace the Apple slogan and add new and innovative fundraising strategies to their current approach. The goal is to increase the number and quality of donors by reaching new audiences with new messages. Crowd-funding, cause related marketing and other new areas in philanthropy should also be aggressively explored. Far too many organizations just hope that their existing donors will sustain them. If what Roubini predicts occurs…they won’t.”
~ There is a terrific blog post by Marc A. Pitman, CFCC, “Recession-proof Fundraising.” Marc provides helpful insights for nonprofits about better managing work in a challenging economy. A more recent addition to this discussion is, “How Nonprofits Can Thrive While Awaiting Economic Recovery” by Nell Edgington in Social Velocity. In addition, John Brothers and Anne Sherman have written a new book, “Building Nonprofit Capacity: A Guide to Managing Change Through Organizational Lifecycles” (Jossey-Bass, John Wiley & Sons, Inc., 2012).
~ The Center on Philanthropy at Indiana University has produced an important research report, “Financial Literacy and Knowledge in the Nonprofit Sector,” February 2012, underwritten by The Moody’s Foundation. “For the past two decades, a growing wealth of economic and financial data has become available to help inform effective decision-making within the nonprofit sector. It has become increasingly important for nonprofit organizations to have the knowledge and skills that are necessary to apply and use this data for decision-making and benchmarking.”
I included this link also in my blog article, “Building Relationships with Professional Advisors,” because donors are seeking the advice of professionals in the financial industry to ensure the nonprofits they are being asked to support are financially sound, and actively managing their finances with sound principles. This report bears a “double post.” Here is another article that points out some of the financial challenges the nonprofit sector faces, “Nonprofit Demand Is Up, But More Than Half Of Charities Only Have Enough Cash For 3 Months Or Less,” from Huffington Post, Huff Post Impact (April 4, 2012).
~ Nonprofits should take time to learn about GuideStar’s tool, Financial SCAN. “Assessing a nonprofit’s financial health is time-consuming and challenging. Which metrics and trends should you focus on? How should you assess surplus size, revenue diversity, and financial stability? What’s appropriate to look for when comparing organizations? Developed through a partnership between Nonprofit Finance Fund (NFF) and GuideStar, Financial SCANSM standardizes financial information to improve analysis and communications.” I admit I would be using this tool to scan my own organization to determine if/where improvements can be made.
HAS IT BEEN GOING ON THIS LONG?
~ Although it concerns the philanthropic reaction to our nation’s economic challenges in 2009, because they have lingered so long, I have posted my personal seminar notes from an AFP Executive Institute at Boston College (summer, 2009), on SlideShare. The seminar was held at the Center on Wealth and Philanthropy. Click on the photograph to reach the Center website. You might note comments made to me by fellow seminar participants about Texas Governor Rick Perry’s handling of the economy (see the conclusion of the notes).
~ The CharityChannel colleague mentioned earlier is Rob Mitchell, CEO of Philanthromax. To quote Rob directly: “What is the one thing that moves the charitable giving needle the most? That was a question that I was recently asked by a columnist. The answer is really easy … It’s the economy. When people are working and have disposable incomes, when companies are making profits, when foundation assets are growing … charitable giving is good. There is a proven direct relationship between the health of the US economy and charitable giving.”
~ You might enjoy following The Washington Post special section, “On Giving,” which focuses on philanthropy and social entrepreneurship. In addition, The Huffington Post has an insightful section that I’ve found very interesting, “Opportunity: What is Working: Nonprofit Sector.”
~ You might enjoy keeping an eye on the website, Philanthrocapitalism. “A new approach to solving social problems is needed, based on innovative partnerships between business, nonprofits and government. A group of wealthy entrepreneurs and business leaders is increasingly taking the initiative in creating these innovative new solutions. Rejecting the idea that business is about short-term profits, damn the consequences to society and the environment, these philanthrocapitalists think the winners from our economic system should give back and that business can ‘do well by doing good’.”
~ I enjoyed this article on Ventureneer by Bruce Arbit (February 23, 2012), “Stimulating the Flow of Capital and Social Transformation.” Bruce notes, “Most importantly … is the need to further understand the dynamics that are moving individuals to mobilize a broader range of their resources to address social/environmental issues. Recognizing that 80% of philanthropic giving is provided by individuals, we need to tap into this spirit with new “products’ while at the same time connecting people to a deeper experience that has always been at the heart of socially motivated enterprises. This is particularly important at a time when new ‘blended’ models of social investment, such as impact investing, are opening up new possibilities for revenue generation.”
Bruce references Contact Fund, a private community investment loan fund in New York City.
As an aside, you might enjoy reading Geri Stengel’s blog for Ventureneer, which you can access via the website. Ventureneer provides online education and peer support for social entrepreneurs, nonprofit leaders, and values-driven small business owners.
~ CNN Money has posted a series of fascinating video discussions about Conscious Capitalism. Conscious Capitalism is described as being one of the best ways to maximize profit while fostering long-term commitment both from employees and customers. A number of well known companies, from Whole Foods and Walgreens to Virgin and Xerox, are profiled. I give this website a thumbs-up!
KEEP INNOVATION ALIVE
~ Although it does not focus on nonprofit work, I enjoyed reading this interview of Curt Carlson who heads SRI International, by Dean Takahashi in VentureBeat, “Now’s the best time for innovation – just don’t choke it,” (July 23, 2011). You can read the entire interview by following this link. “The good news is this is the best time for innovation in the history of the world. Every field is wide open ….” I personally believe this is also true of the nonprofit sector, and the possibilities are endless.
TechFreedom, a non-profit, non-partisan technology think tank, has its fingers on the pulse of technology development. “Our mission is to promote the progress of technology that improves the human condition and expands individual capacity to choose. We advance the freedoms that make experimentation, entrepreneurship and investment possible, and thus unleash the ultimate resource: human ingenuity.” This is a group to be watching ….
NONPROFIT – FOR-PROFIT
~ Stephanie Strom writes in Dealbook, “In New Brand of Philanthropy, Nonprofits Invest in For-Profits” (December 11, 2012). “Philanthropy is taking its cues from Wall Street and Silicon Valley. The language of finance is so common that it is sometimes hard to tell the difference between an investment conference and a fund-raiser. Grants are referred to as investments, and public-private partnerships as innovations. Money used to buy vans, computers and buildings is called growth capital.”
~ Here are a few examples of nonprofits actively involved in fostering small business ventures: 1) The Conservation Fund, via ShadeFund, which provides small loans to green entrepreneurs, and Natural Capital Investment; 2) Kiva, which connects people via lending to alleviate poverty (i.e., microfinance); and 3) PeopleFund, which seeks to “create economic opportunity by helping people build healthy small businesses,” among other economic development pursuits.
~ I was recently introduced to ACCION, a private, nonprofit organization that gives people the financial tools they need to work their way out of poverty. “By providing ‘micro’ loans, business training and other financial services to poor men and women who start their own businesses, Accion helps people work their way up the economic ladder, with dignity and pride.” ACCION considers itself the largest nonprofit microlender in the United States. This is definitely a nonprofit with a for-profit mission, and donations are accepted.
… Grameen America “provides affordable micro-loans to financially empower low-income entrepreneurs. Our vision is to help create a world free of poverty. We predict a market where any individual with a dream can receive affordable financial products regardless of income, previous credit history, education, or business experience. We envision a world where burgeoning entrepreneurs are empowered to lift themselves out of poverty through hard work and determination to forge better lives for their families and future generations.”
… The Cherie Blair Foundation in the UK has as its mission investing in women entrepreneurs, “so they can build and expand their businesses and – in doing so – benefit not only themselves but also their families and communities.” The Foundation’s reach is global, and the website includes helpful ongoing articles and updates like this one from Foreign Policy (April 25, 2012), “Why Women Are a Foreign Policy Issue.”
… MicroEnsure ~ “Helping the Poor Weather Life’s Storms” ~ is an insurance intermediary in nine countries, focusing on the areas of credit life, funeral, health, political violence, property and weather index crop. This is a new discovery and a fascinating endeavor. Last but not least, The MasterCard Foundation has launched, “a partnership to increase access to financial services for an estimated 5.3 million people in Sub-Saharan Africa. Building on recent economic momentum and stability in many African economies, the project will create new opportunities for economically disadvantaged people to expand businesses, gain access to cost-effective financial services, and manage risk.”
~ Devin Thorpe has written for Forbes, “Why Crowdfunding Will Explode in 2013″ (October 15, 2012). In addition, Geri Stengel has written for Forbes, “Why Crowdfunding Is a Game-change for Women Entrepreneurs” (January 30, 2013). “The crowdfunding market could be worth $4.6 billion annually in five years, according to research conducted by Crowdfund Capital Advisors and the University of California, Berkeley.” If you read my blog post, “Women and Philanthropy,” it becomes apparent that women are influential in charitable giving, and also according to Geri, in crowdfunding. This is a trend nonprofits should also be following.
Kickstarter is one example of a highly successful crowdfunding platform that facilitates, “gathering monetary resources from the general public, a model which circumvents many traditional avenues of investment.
People must apply to Kickstarter in order to have a project posted on the site, and Kickstarter provides guidelines on what types of projects will be accepted. Project owners choose a deadline and a target minimum of funds to raise. If the chosen target is not gathered by the deadline, no funds are collected (this is known as a provision point mechanism). Money pledged by donors is collected using Amazon Payments, and initiating projects requires a U.S. bank account.” Wikipedia provides a more detailed overview than that found on the website.
Kickstarter provides a fundraising platform for an array of aspiring projects, but became especially well known for supporting the arts. In fact, Kickstarter “grants” will outpace those given by the National Endowment for the Arts in 2012. I myself participated in a Kickstarter project, helping to fund the New York Fashion Week showing of clothing designs by San Antonio’s highly regarded Angelina Mata in spring, 2011. Participating was both great fun and personally rewarding. In 2012, I have supported several more Kickstarters!
Here is an exciting new trend, discussed by Alex Fitzpatrick of Mashable, “NYC Highlights Kickstarter Projects in Low-Income Neighborhoods” (August 15, 2012). “Can Kickstarter and local governments work together to help citizens raise money for community improvements in low-income neighborhoods? That’s the hope of the New York City Council, which announced this week that it will curate Kickstarter campaigns aiming to improve the quality of life in New York City’s poorer neighborhoods on a dedicated page, Kickstarter.com/NYC.”
Alex has written another thought-provoking article, “Is Crowdsourcing the Secret to Creating Innovation in Government?” (June 13, 2012). Food for thought ….
And for a wealth of other news regarding crowdfunding platforms, you might refer to VentureBeat.
~ The Skoll Foundation‘s mission is to drive large scale change by investing in, connecting and celebrating social entrepreneurs and the innovators who help them solve the world’s most pressing problems. In addition, you might want to review the website of the Schwab Foundation for Social Entrepreuneurship.
“The Schwab Foundation for Social Entrepreneurship provides unparalleled platforms at the regional and global level to highlight and advance leading models of sustainable social innovation. It identifies a select community of social entrepreneurs and engages it in shaping global, regional and industry agendas that improve the state of the world in close collaboration with the other stakeholders of the World Economic Forum.”
~ “The Social Entrepreneurship Spectrum: For-Profit with a Social Mission,” is a helpful article from Inc. Magazine.
~ One can also point to TOMS, a model for-profit business with a nonprofit mission to provide shoes to needy children, which has been quite successful. For each pair of shoes purchased, another pair is donated. A new division has been added to TOMS, a line of eyewear. “Of the nearly 284 million people in the world who are visually impaired, almost 90% live in developing countries. It’s a vicious cycle – poverty and disease can lead to vision loss. And blindness and poor vision keep people trapped in poverty.”
~ Root Capital invests specifically in rural agriculture projects in poor countries to help jump-start new businesses. It has been profiled recently by Fast Company.