You’re correct that the term needs a good definition. I’ve always thought of it as the money an organization needs to grow – to scale to some meaningful fraction of the problem it’s addressing. In that respect, it seems to me, nothing is more important than building the revenue engine, because if an organization builds that, and revenues grow, it has all of the money it needs for all of the other things on your list, and it isn’t dependent on any other single entity for it.

Ironically, the very NGOs that are trying to “teach the poor to fish,” so to speak, have to be given the resources to be able to fish for themselves.

Its not just about building a sales engine. Its not just about getting the program perfect. Its not just about being efficient, or paying folks enough so they won’t burn out. And its not just about paying for evaluation to strengthen the proof story.

Its about working backwards from a sort of homeostasis, where all of these elements combine in a way that compels all involved (beneficiaries, employees, funders) to want to repeat what they’ve done.

The SIF will be something very special if it can be managed in a way that sticks to this growth capital (I like to call it Philanthropic Equity) role.

Otherwise, its just another check-writer with a small staff, looking for programs to fund for a while.

1. Will the reporting burdens Jeff Trexler alluded to (http://twitter.com/JeffTrexler; http://bit.ly/btxhr) present barriers to participation for grantmaking institutions that have never received federal funds before? Moving from simply providing audited statements to providing financial statements that comply with OMB Circular A-133 is big step. And as the Circular states, this responsibility will part be shared by subgrantees as well.

The philanthropic field is trying to move toward less toward less reporting burdens (see http://www.projectstreamline.org). The additional reporting demands that the Corporation for National and Community Service would most likely require in order to track metrics and program outcomes might also be a shock to the system for some grantmakers. That burden would have to be shared with subgrantees as well, which may add a chilling factor to outreach efforts to potential grantees. I can also foresee instances where foundations would have to hire staff to specifically handle these responsibilities.

2. Will potential partner grantmakers shy away from participating in the effort due to an increase level of government scrutiny or issues around power dynamics? I’ll be provocative on this point: power dynamics are an ongoing issue within the philanthropic community. Many foundations are used to having the power based on their position of distributing funds. Receiving funds from the government would shift those dynamics and may be a reason for some to shy away from participating in the program.

3. How will the Social Innovation Fund and the Corporation for National and Community Service identify and fund an innovative idea that has not demonstrated results yet but has an innovative approach that might generate a better return than an existing proven approach?

It’s truly astounding to have the President give a speech about the work of social entrepreneurs and how we can identify, invest in, and scale social sector solutions. His speech presented a new vision for the role of government in solving our nation’s social problems, including how government can more effectively partner with nonprofits, philanthropy, the private sector, and citizens. It’s exciting to have leadership for the Innovation Fund at the highest levels of our government, and for President Obama to recognize it not just as another program, but as a model for his vision of how government should partner with the nonprofit, philanthropic and private sectors. We certainly hope you’re right that this Fund ends up being a really big deal!

I would be remiss if I didn’t mention that none of this will happen if Congress doesn’t appropriate the funding for the Innovation Fund. We hope that supporters of this idea will call the House and Senate appropriations committees to convey their support.

Kelly Ward, Director of America Forward

“Project funding should be placed as a social-benefit fund under oversight of an independent board of directors, particularly including representatives from grassroots level Ukraine citizens action groups, networks, and human rights leaders.

“This program provides for near-term social relief for Ukraine’s neediest citizens, most particularly children who normally have least possible influence and no public voice. Over a few years time, the net cost financially is zero. Every component is designed to become financially solvent, through mechanisms of cost-savings and shared revenue with other components. One component, Internet, provides essential communications infrastructure as well as a cash surplus to be used to offset any lingering costs of other components such as childcare, and otherwise goes to a permanent social benefit fund under oversight of the aforementioned independent, citizens-based non-government board of directors.

“Any number of other social enterprises can be created. Furthermore, any number of existing for-profit enterprises are entirely free to contribute any percentage of profits they wish to increase the proposed initial $1.5 billion social investment fund. If for example the total fund comes to $3 billion, that amount would generate at least $300 million per year in a hryvnia deposit accounts at any one of several major Ukrainian banks, to provide ongoing funding to continue to create and expand social enterprises.

“This strategy places adequate funding for social benefit under control and management independent of government and the very obvious vicissitudes and conflicts inherent therein.

“This is a long-term permanently sustainable program, the basis for “people-centered” economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine’s poorest and most desperate citizens, rather than a “top-down” approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first — not secondarily, along the way or by the way.”

Sean,

My fear is that “growth capital” will be used to fund program growth. That isn’t sustainable. Once the capital’s been spent to grow the program, there’s nothing to maintain it. This is a ubiquitous and chronic problem with foundation grants, for example. If, alternatively, the “growth capital” is used to fund the growth of revenues, then we can sustain the program growth. “Sales engine” might not capture the breadth of opportunities to fund growth, but you know what I mean; development/fundraising/new community wealth ventures, etc.

The president says the fund will “invest in [high-performance nonprofits] to help them grow.” Does he/the fund know how? It’s encouraging to see the use of the word “scale” and “grow” in his remarks, but I don’t think many people, including the president, are thinking about how we address scale. It will not be by investing in promising program approaches. The growth potential of that investment money will get annihilated with the program spend. Investment in fundraising, development, marketing and advertising – all still pretty much criminal ideas in the sector – is the only way we will dramatically increase scale. But no one ever mentions that. We have to stop obsessing over investment in programs and start focusing on investment in the sales engines of nonprofits. It’s the only path to generating massive new, self-sustaining revenue streams to fund the innovative new programs.

The sector has to take market share from the for-profit sector to fund social progress. The only way it can do that is by building consumer demand. That’s where new capital should be invested. Ironically, investing precious new “growth” dollars in new program ideas only delays our ability to grow anything.

“In order for economic development to take place in any given location, the very first thing required, before anything else can possibly happen, is information. This information includes first and foremost where to look for the necessary resources to do anything. If new businesses are needed, knowing they are needed and finding funding for them are two very different things. The first step is to locate possible capital resources in order to move forward, and this step is no more and no less than information. Once resources are located, the next step is what terms and conditions are involved in obtaining those resources — more information. Once this is known, paperwork must be completed, business plans made, market research and due diligence conducted, and all of this compiled and forwarded to the appropriate parties. Again, nothing more than information. In fact, most of the work involved between identifying a need and solving the problem is information acquisition and management: getting and developing information.

“As Alvin Toffler predicted in Power Shift, where once violence and then wealth were dominant forms of power, information is now becoming the dominant power. Those nations with the greatest freedom of information and means of transmitting it have now become the most powerful and influential, and the strongest economically. Toffler also predicted the collapse of the Soviet Union would come about due primarily to its authoritarian control and limiting of information. Unfortunately for Russian citizens, this old habit has continued for them beyond the collapse of the former Soviet Union and will at the least make an interesting case study on the survivability of a once strong nation which still remains committed to limiting and controlling information.”

http://www.p-ced.com/about/history/

IMO, organization tend to spend too much time trying to find volunteers and far too little time figuring out what to do with them. A lot of my volunteer experience has been political volunteering. One thing I don’t really like is to talk on the phone, so phone canvassing is not really my cup of tea. However, I will stand outside to talk to people all day; I have no problem standing on corners and accosting people, knocking on doors, etc. Occasionally, I will show up for a volunteer effort and someone will try to shove me behind a phone. At the same time they will take some other poor schumck who would rather be inside on a phone and force him to stand around outside. The end result is that we both are unhappy and both end up doing a mediocre job. Now, it would be easy to decide that the problem is that we are just not “good” volunteers and the organization should be focused on recruiting more “good” volunteers instead of deadbeats like us. But the real issue is the assignment of volunteers in such an ad-hoc fashion that volunteers almost inevitably end up with jobs that are outside of their strengths.

At the end of the day, is a cultural shift that needs to involve everyone. Clearly, your point that nonprofits need to manage volunteers better is correct.