My Social Entrepreneur Identity Crisis… And, Philanthropy is Sustainable
December 11, 2008 | Nick Fellers
Lately, I’ve been having something of identity crisis with respect to ‘social entrepreneurs’ and ‘for impact leaders’. A consensus definition is forming that a social entrepreneur includes using some sort of earned-income model. Moreover, I see a general attitude from those consensus circles that fundraising/philanthropy is somehow ineffective or even, in some cases, undesirable because (as I was told by someone last week) ‘it’s not sustainable’.
The traditional nonprofit paradigm needs to change (and is changing). Tom and For Impact have been sounding that horn for a long time along with many others – I don’t think we’re the first and we certainly are not the only.
I have a slightly different take on what a social entrepreneur is–the definition. To me, it’s someone that thinks like an entrepreneur and puts his or her efforts into changing the world. It’s not about the business model, it’s about the attitude. It’s not about earned-income, it’s about ‘changing the performance capacity of society’ (Drucker’s definition).
Social Entrepreneur v. (For) Impact
I was working with an org that’s actively implementing a ‘hybrid model’ including a revenue stream and some private funding support. This organization is tackling poverty and has a pretty kick ass approach (making a HUGE impact). The leaders of this organization run in the social-entrepreneur-world there was a huge romance with finding sustainability through earned income. So much so that that became their message and focus. My question: Do you want to be best in the world at building a hybrid or do you want to be best in the world at ENDING POVERTY?
This is a VERY IMPORTANT question.
On Philanthopy.
It’s sustainable. That is, there is plenty of money and I think many are wrong (fools?) to shun this as a readily available resource to be leveraged. What’s not sustainable is working with that capital and not being able to communicate the impact, the ROI.
- Last year the US gave away $306 Billion. According to the Giving USA this number has gone up every year since 1987. Even this year it was going up (just not at the same rate as previous years).
- We’ve also done work in Europe and while I’m not as familiar with the climate I can offer a field-level view that philanthropy is exploding. In Ireland, for example, they’ve changed laws to make giving tax-deductible. While this isn’t the REASON people give it does elevate awareness and the culture of philanthropy.
- Last January Businessweek interviewed the worlds top philanthropists who said their number one challenge was giving away money effectively, not making money. Think about that… plenty of money… challenge is to do good.
- I’ve attended Social Enterprise gatherings and am always struck by this point (made by a speaker – I forget the attribution), “It’s hard enough to start a business with people that have their lives together than to try to pull that off with those that are struggling.” More
So what is the answer?
Philanthropy is VERY sustainable for those that show ROI in terms of IMPACT. To offer one example, it can come in the form of long-term strategic partnerships (think City Year and Timberland).
And, to be clear, I am an entrepreneur. I LOVE creative revenue streams. I just want to raise the point about focus, return-on-energy and the trend I’m seeing.
We need to show communicate impact – always.
I’ve been with the foundations and funders that say things like, “We only like to start programs because we don’t want the organization to be dependent on us for operating.” I’ve asked these same funders: “WHAT IF we could show you how that money saves lives every year?” They look at me with a loss for words… as if no one has ever presented this challenge and quickly assure they would more than happily look at such an investment.
Rockefeller… Gates… Google.org. It ain’t going anywhere. I think a real entrepreneur would always leverage these resources. It’s quite sustainable so long as we’re having an impact.
New Faces of Philanthropy (For Impact)
December 8, 2008 | Nick Fellers
Last week’s Barron’s weekly magazine featured a story on the New Faces of Philanthropy. It’s a look at Gen X and younger/generational philanthropists (’Next-Gen Givers’).
The article is worth a read if only for this excerpt (my bold caps):
These younger givers—entrepreneurs, executives and latter-day members of old-money clans—are intent on leaving a mark now, not in their 50s and 60s. Some are even dropping the p-word itself. “We don’t call what we are doing philanthropy; we call it having an IMPACT,” says Peter Kellner, 39, managing partner of Uhuru Capital Management.
I’ve been reading more and more about the ‘impending leadership gap in nonprofit management’. I find it difficult to relate to these reports for two reasons. First, pick any point in history and the most-senior leaders will probably be about ready to retire. Secondly, (as a biased gen-x person) it’s just not consistent with what I’m seeing in the field. Although this article spotlights the resource end of the chain it illustrates leadership in the late 20’s through early 40’s noting:
- Gen X Millionaires doubled the size of giving by their parents and grandparents.
- Giving is global. “In contrast to grandparents who might have defined “giving back to the community” as contributing to local churches, hospitals and schools, many younger philanthropists think the most compelling projects are overseas.”
Note: I think ‘The World is Flat’ but don’t agree with this assessment wholesale. - The new lens is not just about ‘business models’ but about effectiveness. Horahh! This is HUGE. I think the conversations about social entrepreneurs are focusing too much on ‘business model’ (means) and not enough on impact (the end) AKA–FOR IMPACT.
Trends v. Fundamentals in Nonprofit Funding
November 26, 2008 | Nick Fellers
We’re asked to talk about ‘trends in philanthropy’ or ‘trends in fundraising’ which troubles me because the social sector needs more discussion about fundamentals – not trends. If you ask me to talk about ‘trends’ I will use this as a lens to highlight the lack of fundamentals – think of it as me spinning the conversation – it’s all good.
Every business in and sector lives and breaths by fundamentals, first.
- A clear vision/direction (illustrated a clear MESSAGE).
- A clear revenue MODEL.
- A clear PLAN including an understanding of the MATH (impact math and income math) to get there (e.g. goals, levels, etc.)
As I’m writing this to compare and contrast trends and fundamentals I realize most of the trends (that get discussed) are really fads because too often they’re ‘the next big thing’ and don’t have staying power. These could include:
- Earned Income (Social Enterprise)
- Lance Armstrong’s bracelets
- 5K races
- Social Networking Funding (The Obama effect)
Maybe if they were backed on a case-by-case basis with fundamentals they would be true trends and not fads.
Example - Earned Income: I went to a Social Enterprise Alliance gathering four years ago. What I witnessed were some orgs starting earned income ventures without attention to fundamentals, no clear plan and no willingness to do the math to see that they were losing $50 on every widget they produced. On top of that, one speaker cautioned, “It’s hard enough to start a business with people that have their lives together let alone those that don’t.” Four years later 16 out of 17 orgs I interviewed abandoned the earned income stream – each for the lack the fundamentals outlined above.
The reason most small businesses fail is because they don’t have a grasp on fundamentals. Nonprofits often don’t ‘fail’ in the same sense that for-profit businesses do [running out of money]. Instead, they limp along for years longer, subsidized by passion, volunteerism and employees on the fast-track to burnout (human capital model)… this unique resource model is often a masking agent for a lack of fundamentals.
If you’re a board member, a senior staff person or development officer you can do a great service to your organization, your team and your cause by leading a discussion on the fundamentals… by leading a discussion to clarify the direction or purpose of the organization, by clarifying the model and by working through the math. This discussion is simple, not easy.
New e-book: Change (the) Rules
November 7, 2008 | Nick Fellers
Yesterday, Tom was in Colorado Springs speaking to the AFP with Robbert Egger about Change. Today, I’m at AFP in NW Ohio talking about more of the same. However, I think Tom had more gumption. He put together an entire e-book on change 
Change (the) Rules (DRAFT) includes all the ‘no-mores’, quotes on change and lots more vocabulary. Tom and I have both been framing our discussions around this quote from Tim Kight:
“Every Organization is Perfectly Designed to Get the Results that it’s Getting.”
Our message, this book and just about everything else we’re doing is about CHANGE, specifically the CHANGE we make to get different results…. Change RULES!
October 30, 2008 | Nick Fellers
Stop being a not-for-profit.
Why do we define our selves in the negative? It makes no sense. Does your organization exist to ‘not make any money’? Or, does it exist to save lives, change lives and impact lives?
Stop defining yourself by what you’re not. Start defining yourself by what you are for: impact.
More than a shift in language we need a different way of being.
This shift is about attitude. It’s about your purpose (the WHY). It’s about re-thinking an entire sector (or two).
In 1950 Earl Nightingale wrote The Strangest Secret to Success. The secret (common to many beliefs, all sectors and all definitions of success): "We become what we think about". What becomes of us when our entire thinking is about nonprofit? What if we think instead about changing the world?* What becomes?
Then there is some great thinking from Peter Drucker who wrote, "Every organization has to prepare for the abandonment of almost everything it does." That’s powerful. We agree. A lot of ’stuff’ needs to be abandoned**.
| Think not and be not about: | Think and be about: | |
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*The Movement: We’ve been sharing this message for the last 15 years and living it for longer than that. The past few years has given rise to an incredible conversation around this VOCABULARY and CHANGE: Social Benefit (Drayton). Social Entrepreneurs/Enterprise. Pierre Odimyer and other change agents are putting resources into ‘for-profits’ that change the world. Google.org comes out and says they will have a ‘for-profit’. It’s no longer about not-for-profit vs. for-profit. It’s about For Impact.
**Abandonment (a start): Direct mail. Lengthy Case Statements. Feasibility Studies. "Volunteer Solicitations". Survival Pitches. Small thinking. Cultivation. Special events (that aren’t special and don’t raise money). Letters that read “We are a 501(c)3” (who cares?). Committee Reports….