Stanford Social Innovation Review

Unfortunately, I can't recommend a specific person for the role of designing a social entrepreneurship program. I don't know if universities like Stanford and Harvard designed their programs with the aid of consultants or had staff members take on the project. I suggest you contact Exec. Directors of such programs to find out what's working, what's not working, and who can help you with your project. Here's a short list of such programs: http://money.cnn.com/magazines/fsb/bestcolleges/2007/social/ http://www.aacsb.edu/members/communities/interestgrps/socialdoc.asp

In all consulting engagements, you don't want to pay for someone else's on-the-job training. Therefore, I suggest you talk to experts in the area of nonprofit mergers and organizations that have just completed mergers to get recommendations for consultants. Here are some articles and resources related to nonprofit mergers:

1. Article in Boston Globe, April 15, 2009 La Piana Consulting, specializes in coordinating non-profit partnerships, quoted in article (but may not have advised on merger)
2. "Merging Nonprofit Organizations" by the Mandel Center for Nonprofit Organizations Authors of this book include Dr. John Yankey, a Professor at Case Western University's Mandel Center for Nonprofit Organizations.
3. Article in NonProfit Times, February 1, 2009 Article mentions Linda Schotthoefer, executive director of the Center for Nonprofit Effectiveness in Miami, FL. and Allen Proctor of Proctor Consulting in Worthington OH.

In my experience, calling people mentioned in the relevant articles and books and asking for their recommendations is a good way to find consultants experienced in exactly what you need to get done.

There is an equivalent to the ACT in the DC area. It's called Compass, and it's a very strong and successful pro-bono consulting organization.

Because banking is such a regulated and unique industry, I suggest you focus on finding reviewers with industry experience. One bank comes to mind: newresourcebank in San Francisco is a place to start. For my own companies, I just picked up the phone and asked for help from someone in a position to do so. Also, reviewing a business plan is a big job, so it's better to focus on one or two areas of uncertainty rather than ask someone to read a long document or presentation.

In addition, visit the Center for Social Innovation at the GSB (if you haven't already) to get connected into the community of students and recent graduates who are creating social change. That could be a good place to start building out your management team.

I asked a friend who has worked in both a community foundation and a school district foundation about the fundraising prospects for each type of entity. Here's her response: "In general, donors tend not to invest in public agencies - hence the need for a non-profit that secures funding and provides accountability. Community Foundations are experts at donor engagement, but have the donors’ intent on the forefront of their decision-making…..so, if effective, an independent 501(c)(3) usually is able to be more successful in both fundraising and nudging the public organizations to continuously provide measurable results."

I thank you for your question. Perhaps the most effective method of assisting schools would be to partner with organizations and companies that already have a presence in South Africa. The offer that you'd make to these organizations is that RedCap has significant experience in improving education and can do the hard work of effectively implementing a program. For example, Room to Read is a US-based NGO that builds libraries around the world, including in South Africa. Perhaps there's a joint venture that you can do with that organization to help accomplish the goals of Room to Read and RedCap. If you give me a list of the types of services that you provide to schools, I may be able to come up with a list of foundations and companies that should have an interest in RedCap's work.

One other possibility is to tap into the microlending area by having entrepreneurs associated with specific schools get loans through Kiva to start small, self-sustaining businesses that benefit the entrepreneur and the school. Kiva is doing quite well at recruiting lenders in the US but is having challenges finding entrepreneurs in places like South Africa. Perhaps RedCap can help in this area.

In my experience, one of the best ways to separate the "crazy and good" ideas from the "crazy and not good" ideas is to try to find similar organizations that are doing well. So for braces, I would like to find foundations that provide dental services or other medical services to youth. SmileTrain comes to mind as one organization to research. Here's another in Orange County, CA. The good ideas are those that have a realistic chance of being funded by donors, government agencies, or clients, so one goal of the research on similar organizations would be to understand the financial model that each organization is using to provide grants or services.

I think that your idea is quite sound. I recently heard of a very talented team that is working on starting a similar business. I suggest that you put together a business plan that explains how you would make it into a sustainable business. If there's a way to make the business work, you should be able to get investments from friends and family or professional investors.

There are some new financial products on the market that may meet your needs. Please see Business Week for a recent overview.

I think the answer to your question starts with understanding the measures that the for-profit lenders use to assess the attractiveness of a market and use those performance measures (e.g. number of borrowers, average loan size, average loan loss rate) to determine exit date. In other words, once you've proved the market is attractive to for-profit entities by achieving your targets, your plan is to leave the market. In addition, I would inform the for-profit community of your plan to exit the marketplace when these metrics are achieved. Such communications should mitigate the risk of crowding out. In a sense you need to "sell" this market to the for-profit lenders by quantitatively demonstrating its profitability and developing a compelling plan for how the for-profit entities will make money once they enter the market.

Your question is a very good one. I think that technology is quite important to discuss as it is often how social entrepreneurs recruit, fundraise, and communicate. I have two starting points to suggest.

Craigslist.org has addressed this topic in their non-profit bootcamps over the past few years. The presentations and podcasts from many of these sessions are online. Perhaps you could use a podcast or presentation as a starting point for a discussion with your bootcamp students. Techsoup also has a collection of articles about non-profits and the Internet including articles on Facebook and social networking.

I can understand your excitement for NHMH. In time your work will help make mental health as well funded and respected as other types of health care. In the start-ups that I've been involved in, enthusiasm has been vital in transforming the organization from an idea to a funded organization fulfilling its mission. I'm currently involved in helping a for-profit company raise its seed funding, so I'm right in the middle of discussions about the mission, message, and fundraising strategy. In its most simple form, the challenge of seed funding involves two simultaneous efforts: finding the right donors and crafting the message and strategy that convert a potential donor into an enthusiastic supporter. With respect to finding the right donors, my experience has been that personal introductions and networking work best. I can nearly always get the meeting or phone appointment if someone provides an introduction. Perhaps some of your classmates from the GSB nonprofit program know someone to whom you should be speaking. Is there a GSB-related email distribution list where you could ask a question to find out who is funding mental health initiatives? I think that getting the message right is harder than it seems. I read that one veteran newspaper writer would spend 1 hour and 45 minutes writing and rewriting the headline for the story and only 15 minutes writing the story itself because if the headline was right, then everything else would be right as well. Perhaps you could borrow some ideas from the venture capital industry about how to pitch an idea. Here's a link to some suggestions for a venture capital pitch.

I have two last suggestions. If your meetings with prospective donors are leading to responses like "call me when you've made some more progress," then either the donor isn't the right one to fund seed stage initiatives or the message isn't yet compelling enough. You should also find out everything you can about the two or three organizations that are most similar to NHMH. You may find the names of potential donors you haven't yet approached, and you'll also get a better sense of the financial model for nonprofits. Such data may be helpful in convincing donors that your plans and forecasts are reasonable.

I think the terms business plan and strategic plan are interchangeable. Because start-ups face lots of challenges, I often add rigor to the planning process by "working backwards." Here's what I mean: If I were starting a non-profit, I would pick a point 2-3 years in the future and describe everything about the organization at that point - sources of funds, costs, number of employees, marketing and outreach programs, etc. Once that description is completed, it needs to be checked for reasonableness by asking questions such as "is it likely that the organization can have funding support of $x in 2-3 years, why or why not?" Finding and doing research on peer organizations is a good way to check for reasonableness. Once the future picture is deemed reasonable, then I work backwards to today and map out all of the steps that need to happen to achieve that future for the organization. That map of how to get from today to the future state of the organization is the backbone of the business plan. For me, working backwards forces those doing the planning to ask and answer the tough questions of on-going support, staffing, marketing, etc. before the crush of day-to-day operations makes it hard to step back and make good strategic decisions. I hope you find this answer helpful.

I think there's something to be learned from the for-profit world about good risks and bad risks. Venture capitalists are in the same position foundations are -- they invest in other organizations with the goal of helping that organization succeed. Venture capitalists divide risk into different categories, including execution risk (can the leadership do what needs to be done?), market risk (is the customer going to buy?), competitive risk (is there another company offering something similar/better?), funding risk (can the organization raise the funds it needs to sustain itself and grow?), intellectual property risk (does the company have the right to use the intellectual property it is using?) and technology risk (can the technology that's needed be developed?). When an investment is being considered, VCs will score, quantitatively or qualitatively, the investment on each of these risk categories. When an organization is new, there are many unanswered questions, and therefore many related risks to those questions. As the organization answers those questions, those associated risks are minimized, and the value of the company increases. One important aspect of venture investing that's related to dividing up risk is the practice of staging investments. New companies with lots of unanswered questions generally raise only small amounts of money, and as the company grows and proves itself, investors are willing to invest more in the company.

I have one additional point based on my experience as an entrepreneur and investor. Good risks are those that the organization can work to minimize. Bad risks are those that are outside of the organization's control and perhaps even knowledge.

The reason that I'm doing the revenue projection drives the method that I select for the estimate. If it is for a cash flow projection and I don't want to run out of money, then I'm going to use a very conservative method for estimating revenue over time. One such method would be to estimate the revenues, past and present, for similar services. When starting out, it's hard to anticipate all of the challenges, so looking to the experience of others is a good way to get a clear-eyed estimate of the revenues over time. If the revenue projection is going to be used to size the organization, I prefer to use a bottoms-up process. (A bottoms-up model focuses on very detailed and easy-to-understand variables to give estimates for the whole business. Example variables include: number of visitors who visit a web site, percent of visitors who register, percent of registered visitors who buy an item, and the average cost of an item.) An advantage of the bottoms-up process is that you can run tests to find out the true values of the key variables as you roll out the business and determine where the opportunities are for increasing revenues. Lastly, I avoid using top-down estimates for revenue projection because the errors can be so large. These estimates take the form of "the whole market is $500 million, and I'll get 0.5 percent in the first year, 1 percent in the second year, etc. Getting customers to click "buy" is hard, and looking at the market as a whole ignores that challenge.

I've often used guides from Nolo Press (www.nolo.com) as a starting point for understanding legal and tax matters. (Sometimes I've ended up hiring a professional after reading the Nolo book, other times not.) Nolo's library includes the following titles:

"How to Form a NonProfit Corporation"

"Starting and Building a NonProfit: A Practical Guide"

I have one more suggestion regarding business planning. Find and contact a few peer organizations (e.g. organizations that are similar to Wine, Women, and Shoes) and ask their leaders about their priorities and challenges. This information will be very helpful when you begin writing your own business plan.

I suggest you start by reading this article in the The Stanford Social Innovation Review and then writing a "theory of change" for your organization. As the article states, a mission is general in scope while a "theory of change" is quite specific. Once that's done, I suggest you write a simple business plan that outlines what you will do, how you will be funded, and your long-term plan for the organization. I have found that business plans are hard to write when my thinking isn't yet clear, and easy to write once I've done all of the thinking. Your next step after writing a business plan depends on the source of funding. Please write back when you are ready, or if you'd like additional ideas and resources.

I have five suggestions for developing a business plan for your organization:

1. A sample of a nonprofit business plan for helping female ex- offenders

2. Toolkit for developing a social purpose business plan (a step-by-step process)

3. Example winning business plans

4. A great article from the Stanford Social Innovation Review on what nonprofits do and what's at the core of a business plan

5. St. Hope, a community revitalization effort in Sacramento, California, led by former NBA star, Kevin Johnson. I included this because you mentioned revitalizing vacant buildings. Perhaps you could contact St. Hope for more information on their redevelopment process. Such information would be very useful in drafting a business plan.

Based on a couple of Google searches, I think that you are in the NYC area. I suggest you contact one of the following local organizations to find assistance in fundraising: the Robinhood Foundation, which funds anti-poverty programs, or The New York Community Trust.

Ask for a "Program Officer" (pogram officers are responsible for making grants), and tell that person what your organization does. Find out the process for applying for a grant, and if the foundation doesn't support your type of organization, get a referral to a donor that does. Both of these organizations are large, and the people working there should have lots of connections and resources to help you.

In my experience, it's helpful to write multiple business plans to address the needs of multiple audiences (e.g., service providers, employees, banks, co-founders, etc.). Of course, all of these business plans are consistent; what differs is the level of detail provided in each plan. Often the language of the request itself will tell you what level of detail is needed in the document. In a situation like yours, I would provide a one-page, high level document describing the history, people, and goals of the organization. If the designer says it's not enough information, then you can ask him why he needs more detailed information.

I spoke with the CEO of Wikia, the for-profit arm of Wikipedia, and he suggested PBwiki (www.pbwiki.com) and Wikispaces (www.wikispaces.com) as providers of private wikis. Both companies provide the wiki software, hosting, and backup for a monthly fee.

In my experience working for start-up organizations, it's very helpful to make some progress before trying to raise money. I think that people are naturally skeptical of new ideas and new organizations. My suggestion is that you expand the definition of progress to include more than the delivery of your services. Getting endorsements from respected business people and NGO leaders, building advisory boards, and forming partnerships with established organizations are examples of ways that you can further the mission of your NGO. With each incremental bit of progress you make, I suggest you make a point of telling all those who are interested in your work about the good news. A steady string of good news will help build support for your organization. Some companies create a "Good News" schedule to help ensure that they are constantly sharing information about the progress of the organization with the greater community.

Based on my experience and your description of the situation, I don’t think you should write a strategic plan at this time. Before you start writing a plan, you should lead your board through a discussion of your organization’s mission, vision, and values. With broad agreement around these key underpinnings of your organization, there’s a good chance that you can bridge the differences among your board members. The worst fate for a newly written strategic plan is for some of the decision makers to reject it immediately because it doesn’t reflect their beliefs about the organization.

If there’s board-level disagreement about the future of a particular program, consider writing a plan just for that program, rather than a strategic plan for the entire organization. A few years ago I helped write a plan for a local Habitat for Humanity chapter that looked at the expected benefits, costs, and required timelines for a program to resell building materials. By focusing on just a small part of the organization’s activities, the ACT team was able to write the plan quickly. Ultimately, the board came to a consensus around the issue.

Don’t make the mistake of simply handing out a written plan to your board and your staff, expecting people to read and learn from it. As you write the strategic plan, you need to have a parallel process in place to present your plan to your various audiences. The most effective presentations are rich with stories, images, and analogies. Take a look at “Why Bad Presentations Happen to Good Causes” for ideas on how to present your materials.

The written plan is an opportunity for you and your staff to think through your organization’s future. The future you envision may or may not come true, but that’s not the goal of the effort. The goal of the effort is to hone your skills as an organization and to commit your assumptions and plans to paper so that key personnel know how to contribute to the setting of strategic direction. Think of strategic planning as exercising one of the organization’s muscles – it needs to be done periodically to maintain strength.