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Nonprofits

The Ugly Truth About Scale

The social sector tackles challenges that affect billions—it’s time to get real about what prevents us from solving our challenges.

After I turned 40 a few years back, I felt like I was running out of time to make the change I wanted to see in the world. I run a nonprofit called EARN that creates new cycles of opportunity for low-income American families. We believe that helping people save for and attain financial goals is transformative and fosters prosperity. EARN is one of the two largest providers of matched savings accounts to low-income Americans, and we’ve been very successful—we’ve gained high impact for our clients and strong support from big funders. But after ten years of innovating, and impacting more than 100,000 people directly and indirectly, I concluded that it wasn’t good enough. We needed to increase the scale of our impact.

When our society is facing massive social and economic problems involving billions of people, why is so much funding, brainpower, and attention given to models that will clearly never scale to match the size of our problems? I’m tired of our sector aiming too low.

Many of you may be tired of hearing about scale! But there’s an ugly truth that we need to put on the table if we’re serious about achieving our missions. Scaling solutions to the world’s social and economic problems is already astonishingly difficult. Yet nonprofits, funders, and social ventures make it even harder by falling prey to stifling incrementalism, where “success” is measured just a few marginal increments from the status quo—often still light years from really solving our problems. This positioning quashes real innovation by never aiming high enough and ultimately leads to rationalized mediocrity. We set the bar lower and lower because the problems are hard, and we often declare success despite the fact that our impact is embarrassingly small compared to the size of the problems we are trying to solve.

We like our outcomes to feel warm and fuzzy, but this often stands in the way of real impact. (Photo by HolySkittles, via Creative Commons)

EARN has been dedicated to scale since our founding in 2001, and we’ve suffered from this kind of incrementalism ourselves. But in 2012, we broke free and announced our goal to open 1 million goal-based savings accounts for low-income Americans by 2022—that’s after opening only 5,000 in our first decade.

The problem that EARN aims to solve—financial insecurity and people remaining poor no matter how hard they work—burdens tens of millions of Americans and is growing. The nonprofit cfed.org recently released a study that said 44 percent of Americans would face catastrophes such as homelessness if their income were interrupted for 3 months. As the number of American working poor has grown from an estimated 50 million to 70 million during the past ten years, I’ve watched too many leaders ask how others can become as “successful” as EARN instead of pushing for the breakthroughs we need to change the country.

EARN’s push to serve 1 million has already revealed a great deal about how we need to change if we are to create the change we want to see in the world. While stifling incrementalism has many dimensions, I see three ways to stop it:

  1. Stop trying to feel so good. I hate to be a buzz kill, but many of the most effective, efficient answers to our problems are not “high touch” and don’t feel warm and fuzzy. “Success” for funders and boards too often requires an unspoken “feel good” factor that limits the ability of change agents to challenge long-accepted norms to seek breakthrough success. We owe it to the people and missions we serve to use the best answers, not just the most emotionally attractive ones.
  2. Emulate software entrepreneurs. The social sector relies too heavily on technology to solve information gaps. Nonprofits and social ventures need to think like the greatest software entrepreneurs among us, who push to use technology much more strategically: to measurably alter behaviors, create new markets, and give needle-moving voice to people and communities without power.
  3. Break the mold of philanthropy, as we know it. Philanthropy, as a capital market, is simply not aligned to support real innovation. In fact, it usually weeds out revolutionary ideas to limit risking scarce resources. While this is understandable on some level, foundations and corporations will see very little innovation as long as they take so few risks. Instead of expecting breakthroughs through incremental change, funders must craft and govern a capital market that rewards merit and aligns form to function. The F.B. Heron Foundation is blazing exciting trails as they change in this direction. I hope others will learn from the shifts they’re making.

We will keep pushing the envelope at EARN, walking our talk of scale as we serve 1 million people in the next decade. I know we’ll take some lumps as we make the hard choices required to give life to this vision, but it is my hope that we’ll inspire many of you to also take bold, visionary risks. The world will be better for your courage.

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COMMENTS

  • Interesting. What’s you solution? Where does the capital come from? Most activists who think on this level end up as advocates, as only the government- particularly the federal government- seems to have the resources and interest to do this sort of work at this level. And that takes an enormous amount of advocacy.
    I’m reminded of a recent Washington Monthly issue that focused almost entirely on asset development, including this great article on IDAs:
    http://www.washingtonmonthly.com/magazine/julyaugust_2012/features/michael_sheraddens_compounding038411.php?page=1
    Particularly toward the end, the author mentions that now is the time to scale up- the “practice is ahead of the politics”. But the current political situation seems to work against any innovative policy like this- Republicans don’t seem to be interested in using the government to help alleviate poverty at all, and Democrats are entirely focused on preserving the safety net we have, rather than innovation. I’m not sure what the solution is. Thoughts?

  • Hi Dan - I appreciate your thoughtful comments here. I think the solutions will take a while - and involve several dimensions. First, I think philanthropy - writ large - should explore the way they define success, and the way they operate as a capital market place - stepping beyond the confines of a theory of change. I also think that npos that have a track record of success and credibility with funders should constructively negotiate more and take bolder stands about shooting for more impactful outcomes. Lastly, npos should more meaningfully engage the tech community to learn how they can create breakthroughs using technology already in use, and sophisticated solutions that can be built in partnership with technology companies. These are just a few of my thoughts - happy to share more on specifics in this and other fora. Thanks again for sparking the conversation.

  • BY Tom Tuohy

    ON March 7, 2013 03:36 PM

    Outstanding Ben. Big problems require big solutions. And our time is running shorter as our crises become more massive.  Our organizations focus has now moved from one person at a time to one community at a time. That declaration and commitment alone has brought us to the head of the table and welcomed us into CEO’s offices. It is a far cry from chipping away at the edges and promoting the dramatic individual transformation. We now are creating and ready to implement community wide change as a model for urban renewal. These times require nothing less.

  • BY Patrick Callihan

    ON March 7, 2013 06:37 PM

    Ben-Thank you for writing this article. We have struggled with this in our own organization. We recently faced a choice whether to stay regionally focused and hands-on, or go focus broader and impact as many as possible. It was a difficult decision and came with some criticism. Our team still struggles with losing the “high touch”. But, already, we have helped more organizations in a year than we probably did the five years prior. It may not always provide the “feel good” factor you described, but I know we are making a greater impact and that is what it is all about. I know you will meet your goal of one million served. I hope that the mold of philanthropy, as you described, follow suit. Congratulations!

  • BY Ben Mangan

    ON March 7, 2013 08:24 PM

    Tom and Patrick - I really appreciate the two of you sharing your experiences and perspectives here. I completely empathize with how hard this is - we feel it acutely at EARN!

  • Gregory Kurth's avatar

    BY Gregory Kurth

    ON March 7, 2013 10:00 PM

    As business shows, scaling requires capital. Growth requires increased working capital. I think that many non-profits would love to move beyond “high-touch.”  But if traditional philanthropy is too cumbersome and government is ruled by inertia, then the capital markers are really all that is left.  Yet, all the talk about venture philanthropy and social impact bonds, despite some regional successes, have not caught on in collectively and meaningfully impacting our society’s most vulnerable citizens.

  • BY Andrew Christensen

    ON March 8, 2013 08:44 PM

    The “high-touch” trap has held innovation captive for too long. We’ve escaped, and we’ve since served more people than the past ten years combined. Freedom is possible. Confront your boards! Either they catch the vision or you should find the door. Life is too short for small-scale thinking. The people we serve deserve better. Thanks Ben for articulating this.

  • BY Ben Mangan

    ON March 8, 2013 09:30 PM

    Thanks for sharing, Andrew. I encourage you to say more about how you managed to pivot so successfully!

  • BY Lars Wang

    ON March 9, 2013 12:47 AM

    Hello Ben !
    Thank you for an interesting article. Also interesting from an European and Norwegian Perspectivew since we the last 30 years have been strongly influenced by “corporate thinking” where CSR, philantrophy and all kinds of new “public mangement” have been popular. Still; some basic questions remains to be asked (again) and answered in the present context. What does it mean to be human, what is justice, what is democray on so on. Maybe at good place to raise these questins could be the city of Athen where once upon at time, if not all, but at least very many were entilted to ask the big quistions and create one of the most innovate cities ever….

  • BY Mike Allison

    ON March 15, 2013 01:14 PM

    Hi Ben,
    I LOVE your piece.  I’ve watched your work grow with EARN from the outset and continue to be impressed by your and the organization’s growth.  It took courage to frame the challenge of scale this way and as a consultant working with nonprofits for over 20 years I am grateful to you.  Since I read your entry I’ve kept coming back to your point to challenge ourselves to dream bigger dreams and asking myself how often I may have accepted (de facto, and unwittingly) the safer, clearer path of incremental change.  By making this question so simple and stark you’ve helped me look anew at my work, and reconsider what is possible.  Thank you!

  • BY Solomon Belette

    ON July 21, 2013 09:38 PM

    Ben, thank you for your article which I just reread. There is nothing I read these days about the social sector that doesn’t mention scale and impact. It is understandable because we have enormous challenges in effectively addressing societal issues. Unfortunately, the most recent recession exacerbated problems that were already daunting. Despite all that, we are fortunate that we have programs like EARN that can make such a huge difference.  In our own agency, Catholic Charities of the East Bay, we entered into a partnership with EARN in Fiscal year 12-13. We have successfully launched it in two of our service areas, Oakland and Richmond. Our intent is to expand in Concord this year. I am inspired by your commitment to scaling and hope that we are supporting your efforts in more than incremental ways.

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