Stanford Social Innovation Review

“I’m Not on Earth to Build Pillsbury United”

What do you say to a nonprofit leader who can’t let go of their brand? “I’m not on Earth to build Pillsbury United.” I couldn’t have said it better, Tony Wagner, long-time executive director of Pillsbury United. Tony is a founding member of a unique collaboration of five human service agencies which formed the Metropolitan Alliance of Connected Communities or MACC Commonwealth, on Jan. 1, 2006, a consolidated service organization. Tony and four of his colleagues realized that they needed to put their clients – and not their brands – first. Their organizations were not as efficient individually as they could be together. So they joined forces.

They call themselves a hybrid operation, but to me, they’re what strategic restructuring experts call a “management service organization.” MSOs are hot right now because they might lower operating costs for individual nonprofits and guarantee each organization’s independence. You could gain the benefits of a merger without losing your autonomy.

The five organizations in MACC, whose combined budgets total $35M, jointly provide administrative functions such as accounting, office technology, and human resources. Their goal is to operate more efficiently and to share best practices to benefit their clients. Yet they still maintain their independent identities, governance structures, and programs.

Initially, the group started out small, with three nonprofits; later two more joined the group. Today, there are seven members of the collaborative. All five of the founding members were human service agencies focused on self-sufficiency programs for families and communities experiencing similar government and philanthropic budget cuts. That kind of mission and operational alignment created synergies for the collaboration and eased the collaboration process quite a bit.

The results show that the collaboration is meeting its goals. At the end of 2007 – after just one year of operation - the MACC Commonwealth agencies reported that their members served 1,000 additional clients and saved their members $200,000 in annual costs. These are impressive results.

The MACC Commonwealth has been so successful, in fact, that it has drawn notable attention including a paper published by the Humphrey Institute that won first place at a national conference on nonprofit best practices.

Tough times call for new thinking. Tony Wagner said it best, in an article in the Minneapolis-St.Paul Star Tribune: “Our primary purpose is to serve people, to serve communities.” Right you are, Tony.

Jean Butzen, Mission Plus Strategy consulting, specializes in mergers and alliances in the Chicago area.

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Stand for Something

Imagine you are the new CEO of a publicly-supported grantmaker that has suffered declines in funds raised over the past 10 years. Would you choose to: 

• Redefine your primary purpose to be fighting poverty?
• Lead your large board of directors, overwhelmingly from large corporations, to make a substantial commitment to policy advocacy?

Such a strategy carries high risk, but it may also offer high rewards. In their canonical article “Philanthropy’s New Agenda: Creating Value,”¹ Michael Porter and Mark Kramer identified “changing the environment” in which grantees operate as the highest level of strategic impact a foundation could hope to achieve. (The others, in ascending order, were consistently choosing the best grantees over time, attracting support to those grantees from other funders, and improving the performance of grantees.) Not all “game changing” initiatives involve policy changes, but in many fields, such as health, human services, the environment, education, and social justice, potential policy changes comprise a commanding share of potential high-impact strategic goals. 

The same case for pursuing a policy strategy applies to nonprofits as well as to foundations. This is something I’ve always emphasized to nonprofit boards and executives when discussing the propriety and benefits of policy advocacy. Organizations trying to prevent foster children from becoming homeless, for example, should also keep an eye on how policy affects that purpose.  Sounds reasonable enough – that’s the case they should make to their boards of directors, and be prepared to make to the broader public.

That’s all fine for foundations with their endowments, I often hear; but what about the risks to a nonprofit’s ability to raise funds and attract volunteers? 

Community foundations have struggled with this dilemma for many years.  Facing competitive pressures from organizations like Vanguard or Merrill Lynch, some community foundations have sought to compete on the basis of efficiency and service to donors, while others have instead emphasized the change they hoped to help create through their philanthropy. Emmett Carson, president of the Silicon Valley Community Foundation, and former president of the Minneapolis Community Foundation, has made a very persuasive argument that, while it may alienate some donors, taking leadership on community issues in the end should attract even more donors and more passionate commitment to the organization. 

The United Way of Greater Los Angeles is one organization that has taken this high-risk strategy. Its example may hold a number of lessons for advocates of funding for social change, and for funders who, whatever their motives, are looking to boost their impact. (I describe why and how they made this shift in this article in Responsive Philanthropy, NCRP’s quarterly journal.) It is too soon to tell whether its new strategy will reverse the downward trend in donations to UWGLA, and there are some who are skeptical about the motives behind the shift. But there is little doubt that the new focus is widely perceived in the Los Angeles philanthropic world to be a major step forward (based on comparing data from interviews with funders over two years ago to similar interviews last summer).  When I asked Elise Buik, UWGLA’s President, about Emmett Carson’s argument that asking donors to join a cause will attract more support over time, she responded, “Well, when you stand for something, you definitely attract new people, and good things can follow.”

UWGLA’s example also may say something about whether board members, who can be quite conservative and risk averse, are as likely to oppose adding policy goals to the mix as is commonly thought. I was recently fortunate to make a presentation to their board about the law governing policy advocacy for nonprofit organizations. Having made dozens of similar presentations to nonprofit directors and leaders, I was amazed at how little controversy was expressed among the board members about the decision to commit to take policy positions. Some of this, no doubt, was due to the work UWGLA staff had done over many months to prepare the board for this step, but it also seemed that the board members – three out of four from large businesses – already knew well the value of lobbying. As Matt Miller has argued, big business has found that well executed lobbying can deliver unbeatable returns. 

1. Free access to the article is also available here – use your own best ethical sense.

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Innovation vs. Execution

BY PETER MANZO
We know what needs to be done more than we have the will to make it happen.

The persistence of start-up nonprofits aimed at perennial missions like family counseling and youth development testify to the spirit, at least, of innovation in the nonprofit sector.  It’s practically cliché that most start-ups think no one is addressing their mission in the way that they will. Of course, there often are real social innovations addressing perennial issues. Look at affordable housing development over the past 20 years, and the rise of more effective strategies for drug treatment and domestic violence programs.  But the point is that it seems the search for the new trumps the search for expanding what already works, despite all we hear about how nonprofits are hidebound and slow to change. Many donors see their role as funding innovation, even though it is no longer reasonable to presume that large-scale support--public or private--will continue to fuel even the most successful and popular programs.

Innovation also predominates among the sector’s thought leaders.  A profusion of print and online journals like the Stanford Social Innovation Review, Harvard Business Review, Fast Company, the Skoll Foundation’s Social Edge online community, and many others extol the virtues of innovation.  It’s not hard to see why: Innovation is something shiny and new, which is always attractive.  But in the nonprofit world, as in the private sector, there is no shortage of ideas, and it often seems to be execution that makes one organization successful where another fails.  In truth, we need both new ideas and sound execution, but the rub is that—particularly in the social sector, where we can’t assume that market mechanisms will maximize the distribution of social goods—execution is the most demanding god.

The memorable title of a landmark public policy article by Martin Levin illustrates this paradox for me: “The Day After an AIDS Vaccine is Discovered: Management Matters.” We don’t have the vaccine yet, of course, but in many other vital areas, we already have the knowledge that gives us the potential to make a huge difference. For example, we know a great deal about--choose your poison, here--the importance of early childhood education, prevention of teen pregnancy, prevention of involvement in youth gangs; and in developing societies, the critical importance of educational attainment for women and basic education about hygiene, nutrition, and other health issues. 

With that knowledge comes responsibility. A colleague recently put it starkly as she described a horribly atomized and ineffective slew of youth violence programs that she is studying. It is a system that has grossly overemphasized suppression despite the proven value of high-cost prevention measures. She observed that the system is responsible for the deaths of over 10,000 children in our city alone in the past 30 years: “We all preside over that.” We know what needs to be done more than we have the will to make it happen.

Please tell us what you think. Post your experiences and comments below.

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Rethinking self-esteem

Building self-esteem in children or among disadvantaged communities is at the core of many social programs. Now, Professor Roy Baumeister’s article concludes that high self-esteem does not lead to personal or societal success.

What do you think?

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The Emperor’s New Clothes?

“Measurable outcomes” seems to have become the new mantra in the nonprofit world.  Everywhere one reads about foundations seeking to measure results, applying metrics, and assessing effectiveness.  The assumption seems to be that, if only we could get a stronger numerical hold on what happens as a result of nonprofit activity, akin to the bottom-line of a business investment or the hard numbers of empirical science, we could do much better at solving some of the great social problems upon which we are all so diligently working.

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