Social Enterprise Job

July 9, 2008 – 7:03 am

The newest position on the Tactical Philanthropy Job Board comes from Root Capital:

Director, Foundation & Corporate Relations
Root Capital (formerly Ecologic Finance) is a nonprofit social enterprise that works at the critical nexus of international development and environmental stewardship. As a development finance institution, Root Capital provides affordable credit and financial education to environmentally, sustainable grassroots enterprises in the developing world. By working with small and medium enterprises (SME) such as organic coffee cooperatives and ecotourism enterprises, Root Capital aims to fill the “missing middle” of finance – the underserved gap between microfinance and mainstream finance. We target the rural poor, who account for 75% of extreme poverty in developing countries, by opening up global markets to very remote people who are generating wealth by creating jobs, building assets and increasing household incomes. Our support provides economic incentives to stay on the land (not migrate to over crowded cities), encourages sustainable production and farming practices; and helps to preserve valuable environments and ecosystems.

The Director of Foundation and Corporate Relations will manage Root Capital’s investor relations programs and working closely with and reporting directly to the Managing Director for Philanthropic Investments. Our strategic plan has established an ambitious fundraising program with an emphasis on building relationships with key partners including financial institutions, corporations, foundations, and high net-worth individuals. The goal is to increase our lending capital from $19 million in 2007 to over $57 million by 2011.

You can find all of the details here. Root Capital also has an opening for a development associate.

By Sean Stannard-Stockton | Comments (0)

links for 2008-07-09

July 9, 2008 – 12:30 am
  • Big Think - Pfizer Presents: Think Science Now
    Big Think has partnered with DonorsChoose to help people inspired by their videos support teachers working on similar areas. In this link a scientist discusses Dirty Harry, Luke Skywalker, and the secret to growing giant pumpkins.
    (tags: philanthropy)
By Sean Stannard-Stockton | Comments (0)

For-profits vs. Nonprofits

July 8, 2008 – 8:35 am

One of the biggest difficulties around the philanthrocapitalism debate is what the word even means. There is a branch of philanthrocapitalists who believe that for-profit business models can cure all the world’s ills. That every social problems has a profitable solution.

I think those people are deeply wrong.

There’s another branch of philanthrocapitalists who believe that philanthropy and the nonprofit sector can benefit greatly by using a financial markets approach to understanding nonprofits and to funding their operations.

This is the camp I fall in.

There is a set of simple equations that are important to understanding the difference between for-profits and nonprofits.

For-profits take labor and capital as inputs into an organization and produce financial profits as an output.

Nonprofits take labor and capital as inputs into an organization and produce social impact as an output.

To me, this implies that there is a good deal of overlap between understanding how nonprofits and for-profits utilize inputs. But there is relatively little overlap in understanding their outputs. This is why there is so much theoretically debate around measuring impact. There’s no good reference point in the for-profit world. Nonprofits exist for a fundamentally different purpose than for-profits. When philanthrocapitalist types demand that nonprofits become financial sustainable, I think they’re missing the point. The real point is to achieve impact. Achieving financial sustainability is just a fancy way of saying that nonprofits need to find a systematic way to secure the inputs they need to operate. But first nonprofits need to determine if they have a system in place to efficiently turn inputs into outputs (impact). If they do (and I believe many do not), then securing sustainability is key.

But sometimes nonprofits will find ways to become sustainable in a way that impairs their ability to achieve impact. Maybe a nonprofit that provides housing for low income families realizes that they could increase rents and become financially sustainable. But in all likelihood, doing so would reduce impact. It would reduce the degree to which the nonprofit was helping the cause of providing housing to low income families.

The interesting thing is that for-profits actually face the same problem. Let’s say a for-profit isn’t taking in enough revenue to pay their bills. They need more revenue so they slash the price of their product by 50%. This may very well have the impact of increasing demand so much that they sell tons more product and revenue goes up. Except profits go down. The for-profit is losing money on every sale and while they’ve increased the “inputs” available to the firm, they’ve reduced their “output” (plenty of for-profit firms have made this mistake, seeking to maximize revenue instead of maximizing profits).

Nonprofits are firms that transform capital and labor into social impact. While there are interesting opportunities for for-profits to create social impact as well as profits, the majority of issues that nonprofits seek to work on will not provide profit opportunities to the firms that are maximizing social impact. There may be ways that a firm can produce both a profit and social impact, but in most cases the firm will realize that by foregoing profits they can increase social impact.

What I think is most critical is that we begin to understand that the work of producing social impact is just as worthy as the work of producing profit.

By Sean Stannard-Stockton | Comments (6)

links for 2008-07-08

July 8, 2008 – 12:30 am
By Sean Stannard-Stockton | Comments (1)

Philanthrocapitalism: Michael Edwards vs. Matthew Bishop

July 7, 2008 – 8:12 am

Matthew Bishop of The Economist coined the word Philanthrocapitalism in early 2006. Earlier this year, Michael Edwards of the Ford Foundation published Just Another Emperor: The myths and realities of philanthrocapitalism, which was highly critical of the concept.

Today, the Global Philanthropy Forum hosts an online debate between Bishop and Edwards with comments open to the public. Give the two sides a read and leave your thoughts. I think that the intellectual struggle over the idea of philanthrocapitalism is one of the most important debates going on today. How the world comes to define and understand the phrase (and especially the tools and knowledge frameworks of the concept), may very well define philanthropy in the 21st century.

You will find the debate here.

Update: the debate is churning along and regular readers will recognize a number of Tactical Philanthropy readers in the mix. Come join the conversation!

By Sean Stannard-Stockton | Comments (10)

Social Enterprise Job

July 6, 2008 – 9:53 pm

The newest position on the Tactical Philanthropy Job Board comes from Better World Books (an investee of Good Capital):

Vice President of Marketing
Better World Books … the “online bookstore with a soul”… is seeking a Vice President of Marketing to help us change the world through a new form of capitalism focused on people, planet and profit.

Founded in 2002, Better World Books is well past the start-up stage. We are a for-profit social enterprise that has a proven self-sustaining business model. With three physical locations, 170 employees, an inventory of over two million books, expansion underway to the UK, $4.0M in private equity and access to multi-million dollar credit facilities, its own e-retail site rapidly expanding to serve both domestic and international customers, Better World Books is poised to move from its current baseline of $20+ million in annual revenues to $100M+ and deliver $30M in direct funding in support of literacy (by 2012)
We seek a top-tier Marketing talent who shares our passion and dedication to helping create a better world……one book at a time.

The VP of Marketing will be a leader in the online used book market, driving integration of brand values across consumer and partner touch points, overseeing customer relationship growth and media relations, and providing tools and support for the book acquisitions team. He/she will provide strategic leadership to enhance BWB’s market leadership and social enterprise and innovation. The ideal candidate will have a track record of attracting and developing high performing teams and skill in brand development and differentiation, digital marketing, and partnership management. The VP of Marketing must exhibit courage and conviction to test, experiment and ultimately drive new business value and customer satisfaction.

You can find the details here.

By Sean Stannard-Stockton | Comments (0)

Foundation Job

July 6, 2008 – 9:41 pm

The newest posting on the Tactical Philanthropy Job Board comes from The Jenesis Group:

Program Associate
Established in 1987, the Jenesis Group is a private family foundation bringing innovation and an entrepreneurial philosophy to philanthropy. Focusing their efforts on the education and development of youth & young adults in underserved communities, Jenesis has chosen Social Entrepreneurs as their change agent of choice to empower disadvantaged and/or at-risk youth to become productive citizens in our democratic society. The Jenesis Group considers it a privilege to include entrepreneurial organizations such as Ashoka, Year Up, College Summit, Sports4Kids, Latin American Youth Center and Positive Coaching Alliance amongst its list of impressive grantees. In addition to its diverse grantmaking programs, Jenesis seeks to leverage its impact by collaborating with like-minded individuals and organizations.

A new position created due to organizational growth, the Program Associate will provide integral support to a very small and highly functioning team. As such, the Program Associate will work closely with the Senior Program Officer to manage all administrative components of Jenesis’ grantmaking process, including reviewing and processing requests, ensuring accurate payment and accounting of grants, and providing comprehensive reports to senior management. This position provides an exciting opportunity to be involved in innovative and entrepreneurial grantmaking and offers room for professional growth.

You can find all the details here.

By Sean Stannard-Stockton | Comments (0)

links for 2008-07-04

July 4, 2008 – 12:30 am
  • Altruism Meets a Weak Job Market
    The Wall Street Journal discusses how the weak economy is spuring more interest from college grads in nonprofit work. But the article also cites an authentic interest from Millenials in “making a difference.”
    (tags: philanthropy)
  • Creative Capitalism: Let’s have more confidence in capitalism
    Mathew Bishop (of The Economist) blogs about the lack of real conflict between capitalism and the ideas of “philanthrocapitalism” or “creative capitalism”. He makes an important point that might bring together the different sides on this issue.
    (tags: philanthropy)
By Sean Stannard-Stockton | Comments (0)

Investing in Great Nonprofit Employees

July 3, 2008 – 8:50 am

My recent column in the Financial Times has sparked the biggest response of my year old career as a newspaper columnist. I’ve gotten a ton of email, comments and the Chronicle of Philanthropy featured the column in Philanthropy Today. The response (of people who have contacted me directly) has been overwhelmingly positive. But I hear through the grapevine of at least a couple prominent people who don’t like the column. I’d love to hear any negative feedback that’s floating around our there.

I would like to clarify something in the column that I think deserves further attention (I only get 800 words in the Financial Times, so I have to leave out some points). In the column I say that donors do not understand how social impact is created (they tend to think it is the money they give, so they want to eliminate nonprofit costs, instead of recognizing that it is what the nonprofit does with their money that creates impact). I then state that for-profit investors have a better understanding than donors do of how the input of money (an investment or a donation) is transformed into an output (profit or social impact).

Here’s the important point that I hope is implicit in my column, but that I want to make explicit: for-profit investors and donors are the same people! I’m not suggesting that “for-profit investors” are smarter than philanthropists. I’m saying that when most people put their donor hat on, they also put on some bizarre kind of glasses that make them see the nonprofit world in a completely dysfunctional way. Instead of seeing nonprofits as firms that create value, the way we see for-profit organizations, they see nonprofits as bureaucratic entities that destroy the value of our donation as it travels from us to the “cause” we hope to support. It is only through this Alice in Wonderland looking-glass approach to understanding the social sector that we could possibly justify underpaying nonprofit employees, demanding that nonprofits only spend our donations on their “program”, and worry intensely about “overhead expenses.”

But I am not in the least suggesting that “business people” or “investors” have a better approach. Business people and investors are donors too and they view the nonprofit sector just as bizarrely as other donors. My discussion of how investors understand that for-profits are organizations that produce value is meant as a template for understanding how donors should view nonprofits as organizations that produce value. My additional point is that many of the behaviors that for-profit firms exhibit in their pursuit of maximizing value production (Handsomely rewarding employees in order to attract the best, for instance) are viewed as scandalous in the nonprofit sector.

By Sean Stannard-Stockton | Comments (4)

links for 2008-07-03

July 3, 2008 – 12:30 am
By Sean Stannard-Stockton | Comments (0)

The Foundation Review: Call for Papers

July 2, 2008 – 8:09 am

In February I wrote about Tactical Philanthropy reader Teri Behrens (director of evaluation at W.K. Kellogg Foundation), new project The Foundation Review. Said Teri at the time:

I am very excited about this new venture because I believe the time is ripe for a peer-reviewed publication that will provide practical information about what works — and doesn’t work — in foundation-funded programs.

Articles submitted for the first issue (Comprehensive Community Change), planned for December 2008 publication, are out for peer review now. Teri has issued a call for papers for issue 2 & 3. Click here to get the details on how to submit your own paper.

I asked Teri why she thinks The Foundation Review is needed and she provided the answers below:

* Philanthropy is increasingly becoming recognized as a profession in its own right. A peer reviewed journal is a key mechanism for building the knowledge base of the profession.

* There is increasing demand for transparency about the workings and results of foundations.

* Anyone who works in philanthropy can point to stacks of technical reports about the field of philanthropy (e.g., those published by Grantmakers for Effective Organizations and Foundation Strategies Group), and about the results accomplished by philanthropy (which are usually published by the foundations themselves). With no central place in which to publish these reports, retrieval and use of the information challenging at best.

* Existing disciplinary based peer reviewed journals may occasionally include articles on topics related to foundations, but they require a style of writing (e.g., an extensive literature review) that is not compatible with the way the sector works.

* Although much of what is published on the results of philanthropic work is written by external consultants — such as evaluation consultants — these consultants also may not have incentives or funding to enable them to spend time writing for peer reviewed publications. Further, disciplinary based journals may not be receptive to articles that report on the broader, community based issues that are generally of interest to foundations.

By Sean Stannard-Stockton | Comments (1)

links for 2008-07-02

July 2, 2008 – 12:30 am
  • The Privatization of Public Service « A. Fine Blog
    Allison Fine points to how Millennials (those age 15-29) are volunteering like crazy but think government “sucks”. Is there a government crisis brewing? When we blur the lines between nonprofits and for-profits is the public sector getting cut out?
    (tags: philanthropy)
  • Creative Capitalism
    A new blog conversation about “Creative Capitalism” and the potential (or lack thereof) for capitalism to be more socially responsible. Some real heavy hitters (Wall Street Journal Columnists for instance) are posting.
    (tags: philanthropy)
By Sean Stannard-Stockton | Comments (0)

Philanthropy Job

July 1, 2008 – 10:25 am

The newest posting on the Tactical Philanthropy Job Board comes from the Center for Effective Philanthropy.

Manager, Client Relations
The Manager, Client Relations is an exciting and critical role that has been created due to organizational growth. It encompasses a broad set of responsibilities requiring analytical skills, client relationship experience and project management capabilities. Using CEP’s assessment tools and research, this person will develop and lead client relationships with some of the country’s largest foundations and will oversee execution of CEP’s data analysis, data generation and assessment tool creation efforts by leading cross-functional project teams. This person will report to the Vice President, Assessment Tools and will directly manage Research Analysts.

The Center for Effective Philanthropy (CEP) works with funders to help them more effectively address society’s most pressing needs. Specifically, CEP provides data and creates insight, so philanthropic funders can better define, assess, and improve their effectiveness and impact. Since receiving initial funding in 2001, CEP has produced widely referenced research reports on foundation performance assessment, governance, and funder-grantee relationships. CEP has created new data sets relevant to foundation leaders and hosted highly regarded programming focused on key issues related to foundation effectiveness. CEP has also developed new, widely used assessment tools. More than 150 funders have used CEP’s assessment tools – and have implemented significant changes on the basis of what they have learned. CEP works primarily with the largest five hundred foundations in the country, including the Gates, Rockefeller, Hewlett, and MacArthur Foundations among others. CEP is a nonprofit organization based in Cambridge, MA.

You can find all the details here.

By Sean Stannard-Stockton | Comments (0)

links for 2008-07-01

July 1, 2008 – 12:30 am
By Sean Stannard-Stockton | Comments (0)

Invest in the Best to Make an Impact

June 30, 2008 – 7:36 am

This is my most recent column from the Financial Times.

Invest in the best to make an impact
By Sean Stannard-Stockton
Published: June 28, 2008 (link to original FT.com column)

Giving money to charity does not necessarily make the world a better place. Nevertheless, most donors believe that donating qualifies as “doing good”. In fact, the gift of money is only the first step in a chain of events that might achieve the elusive goal of creating social impact.

For-profit investors understand this issue. Making an investment does not guarantee a profit; this comes from what a business does with its capital. A result of the belief that the donation itself produces an impact is the idea that non-profit organizations should spend as little as possible on their infrastructure. We see this belief manifest itself when we hear people complain about charities “wasting money”, when press reports grumble about the high salary of an executive director, or when donors are encouraged to focus on a charity’s overhead expenses as a deciding factor on where to give.

Of course, we have a radically different way of thinking about for-profit entrepreneurs. We celebrate the idea of a few people in a garage, with limited resources, inventing the next big thing. We are enamored of the concept that in dorm rooms at Stanford and Harvard, the next Ebay or Facebook is being developed. Implicit in this ideal is the idea that business profits are a product of brilliant people with creative ideas, figuring out how to be successful.

In both business and non-profit work, the critical factors of success are people, ideas and passion. Everything else is secondary. As a nation of stock market investors, we understand this. We are attracted to investment opportunities because of the people leading the company, the ideas for new products or services, and the way the company seems to throw itself at opportunities and relish the chance to compete.

Google lets its engineers spend a day each week working on whatever project catches their interest, and feeds its employees gourmet food in free cafeterias. Google’s stock is up more than 500 per cent since going public less than four years ago. But can you imagine the outcry if a large non-profit let its employees spend 20 per cent of their time on interesting “side projects” or gave them fancy free meals? Never mind that non-profit employees are shamefully underpaid compared with their for-profit counterparts (certainly no stock options for these “do-gooders”). If a non-profit followed Google’s business practices, donors would flee, the media would write exposés and Congress might even investigate.

What a disgrace.

Americans give more than $300bn a year to charity. It is time we reframe what we expect from the non-profits we fund. Let us ask for more innovation, more creativity, more impact. But as a nation of philanthropists, we can not make this demand without holding up our end of the bargain. We need to expect non-profits to hire the best people, and support our donations being spent on competitive salaries. We need to encourage non-profits to take risks, and understand that risk-takers fail sometimes (even frequently). We need to believe that non-profit leaders know best how to achieve their mission, and just as investors do not tell companies how to spend their investment dollars, make the majority of our donations for general operating support.

Imagine the way we could remake our world if non-profit organizations were backed by investors who encouraged them to hire the best people, to poach employees from Silicon Valley and Wall Street, and to bump shoulders with Fortune 500 recruiters at Ivy League career fairs in the fight for the best talent. Imagine the good we could achieve if landing a job at the United Way or the celebrated Teach for America inspired the same joy that getting a high-tech or investment banking job provokes today.

But that will cost too much! We cannot afford it! How can we possibly pay non-profit employees the same rate as for-profit employees?

Here are the facts. According to the Urban Institute, public charities collected $1,600bn in revenue in 2005 and held $3,400bn in assets. These numbers do not include the more than 800,000 small non-profits that are exempt from reporting.

In reframing our understanding of the non-profit sector, we must recognize that we cannot afford not to hire the best people. Fortunately for us, the non-profit sector is teaming with passionate individuals who are innovative enough to figure out how to do their job in such a backward system. Imagine what could be achieved if we transformed our dysfunctional understanding of charity.

As we face the myriad challenges of the 21st century, we must focus our examination of the social sector on identifying the very best people and organizations. We must champion these leaders and invest heavily in their ability to achieve an impact. Just as businesses turn investment dollars into profit, non-profits turn philanthropic dollars into social impact. It is not enough to simply do good, it is time to start funding the best.

The writer is a principal and director of tactical philanthropy at Ensemble Capital Management and author of the blog TacticalPhilanthropy.com.

By Sean Stannard-Stockton | Comments (30)