Stanford Social Innovation Review

Competition vs. Cooperation at the Base of the Pyramid (BoP)

There are two competing philosophies that, at first glance, seem to both provide value to the base of the pyramid (BoP) approach – competition and cooperation. In my mind, the BoP theory is as close as any to a “free-market” approach to development, as it promotes competition that will bring the best products and services to meet unmet demand. Competition is a part of a self-regulating market. It inhibits price-gouging, encourages multiple product and business model designs, and provides consumers with choice – all key tenants of the BoP philosophy.

However, as organizations working at the BoP compete, their focus can shift – from the customer to the competitor. If competition is not dealt with properly, it becomes a battle of resources and reputation, instead of a fight to serve the poor in the best way possible.

A similar phenomenon has plagued the NGO community over the years, and this is partially caused by serving two masters – the “client” on the ground and the “donor” (agency, charity, government) in the developed markets. Were the NGO community unconcerned about serving the latter, we would probably not see as many fancy websites or media releases – but the truth of the matter is that we need both constituencies.

I am not saying that we do not need BoP organizations to engage in competition on the ground, but rather that from what I have seen that is not where the battle has been waged.

From my perch at the William Davidson Institute, I have seen that as competition heightens, resources and energy shift away from improving direct delivery of goods and services towards building legitimacy in established markets. Leaders tell their teams: we have to have a case study written about us; it is time to re-brand ourselves; our Web site needs a facelift; why don’t we try to co-brand with a company, etc.

When it comes to organizations that are attempting to work at the BoP, but still reliant on legitimacy (i.e. funding and talent) from developed markets, there may be value in cooperation — a word that can leave free-marketeers shuddering with fears of inefficiencies.

Why cooperate? According to NextBillion.net’s Rob Katz, the base of the pyramid market is still largely a free-for-all.  The vast, untapped nature of the market means that it will take numerous organizations, working together, to spark more interest and investment in the BoP before the stakes are high enough to worry about stashing resources.

According to Katz,

“I would note that no VC fund in its right mind cooperates with its direct competitors, but it is a testament to (a) the size of the market and (b) the sub-optimal state of the field that Acumen Fund and others are looking to cooperate as much as we are when it comes to supporting small and growing businesses at the BoP. If this were a truly commercial opportunity, we could not be working together as we do. The fact is, it is still VERY much a hybrid space, and we need to band together to create a commercially viable, investable asset class. That’s why there’s plenty of cooperation. 

“I’m not the only one who thinks so, either. Brian Trelstad at Acumen Fund and Willy Foote of Root Capital have both articulated these ideas to me recently, and each notes that the need to cooperate in a hybrid space is what’s driving the growth of the new Aspen Network of Development Entrepreneurs. Think about how microfinance has grown – 30 years ago, non-commercial, hybrid microfinance institutions were all banding together at conferences. Gradually, with a lot of philanthropic support, they’ve developed a real industry, and now microfinance is a commercial, investment-grade asset class. We need to do that with small and growing businesses serving the base of the pyramid market.”

Despite the benefits of cooperation, and the numerous networks that have been established to promote cross- pollenization in the field, such as ANDE and PDMS/Pulse, BoP organizations, like any business or NGO, are concerned with their own growth and survival.

Take talent, for example. The war for talented individuals with the skills and the passion to work at the BoP is intense. If an employee at a U.S. intermediary organization were to decide that he or she may be better suited for a project on the ground, how likely is it that his or her employer would say, “Oh yes, that sounds great, we want you to have the greatest impact possible.”

It is much more likely that the organization would do everything in its power to hold on to that highly-skilled person, regardless of whether or not it resulted in the greatest good for society. This is partially because we believe that our organization, and our cause, with which have sacrificed so much for, must be doing the most good.

Let’s take another salient example – intellectual property and technology rights. In the field of transporting water, there are many competing designs. The producers of the Hippo Water Roller, a South-African based design, have chosen to not patent their technology. Co-founder Cynthia Koenig told me that this is because:

“Rather than trying to control our design, we’d prefer to serve as an inspiration for similar tools. After all, we’re trying to solve a problem, and realistically, we won’t be able to distribute Hippos to all the 1.1 billion people who lack easy access to water.”

It’s main competitor – The Q-Drum, which is also located in South Africa, has chosen to take out a patent for its similar design. I’m not saying that either approach is better. In fact, founders of both organizations may believe that their approach to competition vs. cooperation may result in the best outcome for the BoP. Many staunchly believe that design for the BoP should be open source, but others point to the fact that patents can create incentives for innovation and result in better quality control. Which approach results in the greatest good for the greatest number?

Maybe the inherent enigma is tied to the fact that most BoP organizations are still serving the dual interests of talent, donors, and media in the developed world while providing on-the-ground services to customers that probably can’t even read their glossy English Web sites. However, there has certainly also been a push for greater cooperation in the BoP space, as we have learned from our NGO colleagues. In my mind, there is value in both cooperation and competition. I think that there is something to be found in the delicate balance of bringing together diverse perspectives on the back-end to establish a market of free competition that leaves the fate of the organization in the choice of the end-user.

Grace Augustine is a research associate with the William Davidson Institute, an educational institute focused on researching and supporting organizations in emerging markets. She writes for the NextBillion blog and has an interest in economic development and clean technology for the world’s poorest citizens.

Posted by Kelsey Walker

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Obama’s Call for Service, a Spur to Giving Sector

The giving sector got a big push from President Obama in his inauguration speech. It also got what should be a big wake-up call.

So while nonprofits and foundations may be riding high, anticipating a surge in giving championed by our new president, they also have a lot of work to do to be better stewards of the time, know-how and money Americans give.

In his speech, Obama called for a “new era of responsibility” and the “recognition on the part of every American” of the shared duties of “giving our all to a difficult task.”

But he also cast part of the blame for the meltdown in our economy to “our collective failure to make hard choices and prepare the nation for a new age.”

While it plays an irreplaceable role in addressing urgent social problems and their root causes, the giving sector faces serious operating challenges it must address to be effective at fixing those social problems.

Nonprofits are expected to do too much with too little, and too few are willing or able to invest in building their internal operations or to raise their voice to speak out and work for social change.

And too many nonprofits still act as if their cause entitles them to support without having to adapt their fundraising to better engage and serve the givers they depend on.

Big nonprofits and foundations also are moaning, respectively, about the difficult of raising money and the loss in the value of their assets because of the decline in the economy.

But instead of getting their own houses in order, they and the trade groups that represent them are tripping over one another in a rush to grab a piece of the government’s massive financial bailout package.

Foundations are flush with donated wealth dedicated to charitable purposes, flush even with the decline in the value of their assets because of the sinking capital markets.

Their job is to serve as vehicles for investing assets givers have dedicated to charitable causes in return for generous tax breaks the givers enjoy.

Yet foundations treat those assets as a source of private wealth and influence they make it their job to hoard and grow.

Far too few foundations are willing to give more than the five percent of assets they are required to pay out each year in grants and overhead.

And far too few are willing to use their voice or their shareholder role to try to shape public policies and the business strategies of companies in which they invest.

In a regulatory system with few rules and weak teeth, foundations operate pretty much as they wish and are accountable to no one but their own boards, boards that typically sleep at the wheel.

That lack of accountability can result in serious damage: Foundations were among the charitable investors that lost millions of dollars in the Madoff investment scandal, losses that might have been avoided had foundations been subject to greater oversight and required to disclose more about their operations and investment practices.

The economic crisis, Obama said in his speech, “has reminded us that without a watchful eye, the market can spin out of control” and that “a nation cannot prosper long when it favors only the prosperous.”

The giving sector does not operate under a “watchful eye,” and regulation of the sector favors big foundations and their wealthy donors, groups that have had the clout, and have exercised it, to successfully fight efforts to tighten regulation of them.

The giving sector can make a huge difference in the effort to fix America’s social problems.

But to truly become an effective vehicle for social change, the sector first must take a hard look at how it operates and fix what is wrong.

Nonprofits need to strengthen their operations, build their capacity so they can secure and absorb more giving, and raise their voice on important policy issues.

Foundations need to pay out more, give more to support nonprofit operations, be more open about what they do, and speak up on social change.

And government needs to do a better job policing the giving sector and making sure it operates fairly and in the light of day.

Rooted in values he called the “quiet force of progress,” the giving sector can continue to serve effectively if it is willing to be brutally honest about itself and work harder and smarter to engage and justify the “faith and determination of the American people” on which Obama said the nation relies.

Todd Cohen, a veteran news reporter and editor, is editor and publisher of Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

Posted by Kelsey Walker

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A Modest Proposal for Nonprofit Lobbying

Here’s an intriguing method of gaining lobbying clout for the nonprofit community: let corporations carry our message.  Washington’s K Street crew may not be welcome in the new Administration but there’s no fear that they’ll run out of work on Capitol Hill or in state capitals.

Are corporations actually more likely to have success in securing favorable legislation on social issues than the charities most concerned with those issues?  At the very least, they’re freed of the [often overstated] fear that “We’ll lose our tax exemption;” and at the very least, lobbying help is something nonprofits can ask of their corporate friends without costing the corporation much extra money–a useful posture in these tough times!

Kelly Kleiman, who blogs as The Nonprofiteer, is a lawyer and freelance journalist whose reportage and essays about the arts, philanthropy and women’s issues have appeared in The Wall Street Journal, Washington Post, Christian Science Monitor and other dailies; in magazines including In These Times and Chicago Philanthropy; and on websites including Aislesay.com and Artscope.net.

Posted by Kelsey Walker

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Giving Sector Needs to Adapt to Economic Crisis

Business as usual should be history for the giving sector.

The recession should be spurring nonprofits, giving organizations and individual givers to regroup and find innovative ways to address urgent social and global needs that only are getting worse because of the growing economic crisis.

Three new studies underscore the need for givers and nonprofits alike to change the way they operate.

On study looks at steps U.S. foundations are taking to cope with the crisis, another looks at the need for U.S. nonprofits to fill key jobs, and a third says U.S. corporations and nonprofits could do more with pro-bono and skilled volunteers to offset a decline in corporate giving.

Foundations already are retooling their work, with nearly two-thirds expecting to reduce the number or size of their grants, or both, according to a new survey by the Foundation Center.

Over half the more than 1,200 foundations responding to the survey say they are responding to the crisis by taking on more work other than grantmaking, with two-thirds aiming to collaborate more, one-third planning to act as convenors, and one-fifth planning more staff-led work such as technical assistance, bridge and emergency financing, or advocacy.

Foundations also say they will tap a range of resources to fund their giving this year, with nearly 40 percent expecting to dip into their endowments.

Fourteen percent of foundations have made or launched, or plan to make or launch, special grants or initiatives to address the economic crisis, mainly by shifting existing grants budgets.

And in response to the economic downturn in 2000-02, nearly one-third of foundations say, they made operational changes, such as adjustments in their investment strategies or reductions in their operating expenses, that they believe better prepared them for the current crisis.

“Foundations are not rolling over in the face of adversity,” says Steven Lawrence, senior director of research at the Foundation Center. “The new survey shows foundations being creative, strategic and willing to dig deep to ensure that their agendas move forward while this crisis persists.”

In a separate survey of nonprofit executive directors, Bridgespan Group finds a leadership deficit projected in 2006 may have widened in 2009 and that, despite tighter budgets, nonprofits already see a need to fill 24,000 vacant or new jobs, in areas such as finance and fundraising, in the face of growing management complexity and retirements by Baby Boomers.

Developing nonprofit leaders remains critical, Bridgespan says, with nearly three-fourths of 433 executive directors responding to the survey saying they value skills from the for-profit sector.

But despite big layoffs of corporate managers, 60 percent of those nonprofit executives believe they will not get enough qualified candidates.

“It’s a wake-up call that even as the rolls of unemployed executives swells, nonprofits are struggling to fill key positions,” says David Simms, a Bridgespan partner. “There is an overwhelming perception that these roles will be difficult to fill due to the need for specialized skills, compensation and funding challenges, competition for the best candidates, and lack of career development opportunities.”

The third survey, by Deloitte, finds that while nearly 40 percent of nonprofit executives say they will spend $50,000 to $250,000 of “hard-won” cash on outside contractors and consultants this year, 24 percent say they have no plans this year to use skilled volunteers or pro-bono support.

“The current economic crisis and the new [Obama] Administration’s national call for service underscores the need for corporations and nonprofits alike to broaden their definition of corporate giving,” says Barry Salzberg, Deloitte’s CEO.

“Nonprofits and corporations are encouraged to think of pro-bono and skill-based volunteerism as a valuable form of currency,” he says. “It is an opportunity to more fully maximize corporate assets, especially when demand for nonprofit services are on the rise and corporate giving is on the decline.”

The ruins of the U.S. economy and capital markets can be the seedbed for innovation in the charitable marketplace.

Instead of bemoaning the obvious, which is that times are tough, nonprofits and givers alike can look for ways to work smarter and make a greater impact.

Todd Cohen, a veteran news reporter and editor, is editor and publisher of Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

Posted by Kelsey Walker

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Three Museums in One

The historic Collaboration Prize, sponsored by the Lodestar Foundation and Arizona-Michigan-Indiana Alliance, announced co-winners on March 5th this year for the best collaboration in the country. The award garnered 644 applications but ultimately the judging came down to a tie between the YMCA & JCC of Greater Toledo and the Museum of Nature & Science in Dallas, Texas. In March I wrote about the former winners of the $250,000 cash prize; this month I am writing about the Museum of Nature & Science, a merger of three museums in Dallas: The Dallas Museum of Natural History, The Science Place, and the Children’s Museum. I interviewed the board chair, Frank-Paul King, of the combined entity which is now three years old.

Mission Plus Strategy: You were the Board Chair of the Natural History Museum at the time the merger occurred. Why were you in favor of the merger?
Mr. King: Fundamentally the museums suffered from mission over-lap, and as a result you create for yourself a couple of problems. Number one, it becomes increasingly difficult for your donors, who are your primary providers of capital, to differentiate how your product is different form anyone else’s. Number two, it’s very inefficient to have three times the overhead, so anytime you can achieve the mission with more efficiency, it is massively beneficial to all that are involved.

Mission Plus Strategy: As the Board Chair of one of the merging entities, what was your role in supporting the merger and making it happen?
Mr. King: My primary role was twofold. Number one: I was one of the champions of the proposed merger within our board. Number two: I was one of the primary transaction facilitators of the mergers. That meant we didn’t have to hire a professional facilitator.

Mission Plus Strategy: How did you combine the boards?
Mr. King: Any institution wants everybody involved who’s interested in being involved. There are different levels of involvement in any organization; anyone who wanted to be involved at a governing board level we let in. We had some pretty high expectations, we need your time, talents and money, and anybody who held up their hand and said I believe in this mission we brought in. 

Mission Plus Strategy: Why did your merger work?
Mr. King: The reason that this worked after it had been talked about on and off for a decade, was because we created a vision for the museum of nature and science for the next century. We asked ourselves: one hundred years from now, what will the iconic nature and science museum look like? That was our big expansive vision and that started us down the road and as we went with it, it made sense for each museum to be with it. The vision has never changed. All that has happened is that the assets have grown, fabulously interesting people have come on board, and the governance changed little.

Mission Plus Strategy: Overnight your job as board chair got much bigger after the merger. What was that change like for you, personally?
Mr. King: Operationally it’s much bigger, but my essential job did not change. My job is to help set priorities and fly the flag for the vision. In many ways, the jobs got easier because we had removed the impediments discussed earlier. We had huge donor support for this.  From an operational perspective, it’s taken us two years to combine the cultures from the organizations; but today it is a rare, rare thing that anyone would say “I came from this or that institution.” It is only by virtue of the Lodestar Foundation that we have even talked about this in the last two years; we are so far beyond the merger; it’s old hat.

Mission Plus Strategy: Do you have any advice for others contemplating this move?
Mr. King: First, it’s all about the vision and the mission. That’s step one. Is the vision shared? The second is slowly developing trust: together we are better off realizing this vision than apart. One of the beautiful things about the economic reality today is that we are forced to think about our missions in a new way because otherwise they might not happen. Once you have vision and trust at a board level, the rest is blocking and tackling; you can hire consultants to help you get there.

Mission Plus Strategy: Why don’t more boards engage in mergers like yours?
Mr. King: Because as human beings we are territorial. It takes inspired thinking to say there is a better way. Let’s not talk about your way or my way; let’s talk about the best way. The for-profit world has the profit motive which can overcome the human issues and the territoriality; in the nonprofit world that doesn’t exist. The only currency you have in the nonprofit world to deal is this bigger vision. If it’s true that you can create something massively bigger by working together then let’s talk about that. We can get excited about that. Let’s just forget about where each came from and, rather talk about where we can go from here - then you’ve got inertia. Lodestar finalists created wonderful inertia.  Once it starts, the naysayers were overwhelmed, and welcome to the advancement of civilization!

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

Posted by Kelsey Walker

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The Nonprofit Institutional Dilemma and More on the Future of Infrastructure Organizations

Earlier this week on Twitter, Idealist.org Founder Ami Dar posted this ominous tweet:

My first thought was: oh no, not another one. Not another nonprofit infrastructure group (those that provide capacity building, technical assistance, consulting, workshops, training, conferences, advocacy and research for the nonprofit sector) on the verge of shutting down. Like many of you, I have a personal connection to Idealist.org because I found my very first full-time nonprofit job on their website. My second thought was: the nonprofit sector needs Idealist. We can’t let it go down like this.
I expect Idealist.org to launch a “Save Idealist” fundraising campaign like so many other nonprofits have done in the past year. A local campaign here in DC that recently achieved major success was “Save WEAVE,” a call to the community to keep WEAVE open so they could continue to provide services to domestic violence victims in the city. But while some of the campaigns to save direct-service programs have been successful, Idealist.org will be the first nonprofit infrastructure organization to launch a public fundraising effort of this sort. (That I know of.)  For a non-direct service nonprofit, it’s hard to know what the response will be. As those of us who work in nonprofit associations or capacity building organizations know, it’s much harder to sell a nonprofit that helps other nonprofits than it is to raise money for a nonprofit that helps the poor. Believe me. I did it for over five years. It was tough. The pool of funding sources for non-direct service programs has always been slim, and is only getting slimmer.
Unfortunately, Idealist.org is not the only nonprofit infrastructure organization in financial trouble.

• Last September, the Chronicle of Philanthropy reported that the Council on Foundations had laid off 16% of its staff amidst decreasing attendance at its meetings.
• The Nonprofit Times reported in April 2009 that the Association of Fundraising Professionals had plans to lay off 14% of its staff, despite record conference attendance that year.
• The Council of Nonprofits has also made a round of layoffs, and now seems to have less senior staff than in previous years. Last year, the Council also made the difficult decision to cancel its 2009 Nonprofit Congress.
• The Alliance for Nonprofit Management began making shifts in their operations in late 2008, with an ongoing series of candid and transparent messages from the Board to their members. Like this one: After difficult and thoughtful deliberation, the Board feels that the most responsible action we can take at this time in order to preserve the mission of the Alliance and insure that members continue to have a voice and place to go for support, is to make major reductions in our budget. These reductions have included restructuring the Alliance with a significant reduction in our staff and engaging a management company (Raffa & Associates) on a pro-bono basis, and one part-time interim program manager to manage the day-to-day functioning of the Alliance.

It makes me wonder, once again, what the future holds for nonprofit infrastructure groups. How are they planning to weather a financial storm that doesn’t seem to be letting up? How will organizations change their revenue models, management structures, and program offerings to be sustainable for the nonprofits they are tasked with helping? I’m thinking particularly of nonprofit associations as they gear up for the 2010 conference season. Are groups still moving forward with the traditional conference program model that costs attendees hundreds of dollars in registration fees and travel? Or are more folks getting hip to the idea of hosting “unconferences” like the amazing one I attended in DC called Social Justice Camp? It was free and it was awesome. And better than many of the nonprofit conferences that I paid big money for.
The ongoing financial and programmatic challenges for nonprofit infrastructure groups is what Clay Shirky meant by the “institutional dilemma.” I’m almost through reading his fantastic book, Here Comes Everybody: The Power of Organizing Without Organizations. You should read it, too. In the book, Clay talks about how technology has allowed for global collaboration to happen without the assistance of corporations to manage their work. How groups of individuals can effectively organize themselves for social change in lieu of operating under the umbrella of an established organization. To be sure, Clay’s book isn’t an indictment of traditional organizational models. He’s not saying that self-organizing groups of individuals will completely take over the role of “the institution.” But what he does do is point out the precarious nature of institutions:
In a way, every institution lives in a kind of contradiction: it exists to take advantage of group effort, but some of its resources are drained away by directing that effort. Call this the institutional dillemma – because an institution expends resources to manage resources, there is a gap between what those organizations are capable of in theory and in practice, and the larger the institution, the greater those costs.
What this means is that no matter how much we want Idealist.org or Council on Foundations or Council of Nonprofits or Alliance for Nonprofit Management to stick around, there will always be inherent challenges to what they are able to do for the nonprofit sector in the long-term. As Clay points out:
Running an organization is difficult in and of itself, no matter what its goals. Every transaction it undertakes – every contract, every agreement, every meeting – requires it to expend some limited resource: time, attention, or money. Because of these transaction costs, some sources of value are too costly to take advantage of. As a result, no institution can put all its energies into pursuing its mission; it must expend considerable effort on maintaining discipline and structure, just to keep itself viable. Self preservation of the institution becomes job number one, while its stated goal is relegated to number two or lower, no matter what the mission statement says. The problems inherent in managing these transaction costs are one of the basic constraints shaping institutions of all kinds.
The approach that several infrastructure groups have taken so far – layoffs, program cuts, management changes – seem to have had a positive impact to their financial bottom line, but I’m not sure that it translates into success for their respective missions. Do I want Idealist.org to stick around? Yes, of course. But I’m more concerned with preserving their mission versus their organization.

What do you think? Will new and better models begin to emerge that will be a win-win-win for nonprofit infrastructure organizations, their members and the nonprofit sector overall? Do you know of any that are bubbling up?

Rosetta Thurman is a writer, speaker, professor and consultant working and living in the Washington, D.C. area.  She holds a Master’s degree in Nonprofit Management and blogs about nonprofits, leadership and social change at rosettathurman.com

Posted by Samantha Penabad

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Haiti Relief Underscores Deeper Needs

While Americans quickly dug deep to support relief efforts in the wake of the earthquake in Haiti, the outpouring of generosity also serves as a troubling reminder of our ongoing failure to better address social and global needs that are urgent, persistent and deeply rooted.

Just as they did after 9/11, Katrina and the Asian tsunamis, individuals, companies and foundations after the Haiti quake have done what Americans do best in times of crisis: They got involved and gave.

What we often seem to forget, however, is that we face a perpetual crisis, one the recession simply has deepened.

At home and abroad, millions are hungry, homeless, in poor health, impoverished, illiterate, and subjected to violence and intolerance.

The giving sector exists in large part to address the problems vulnerable populations face.

But among the nearly one million charities in the U.S., many struggle with limited resources and big operating challenges.

Individuals, foundations and companies in the U.S. give over $300 billion a year to support charities, and often give more after horrific events like the quake in Haiti.

But the charitable marketplace has changed dramatically in recent years in the wake of financial and ethical scandals and the collapse of the economy.

Many foundations and corporations have narrowed the focus of their giving, and are demanding more business-like operations from charities seeking support.

Those funders want nonprofits to be more strategic, set measurable goals, create clear metrics to gauge their impact and effectiveness, and make their staffs and boards more diverse and inclusive.

These all are important goals: To address critical needs, nonprofits must be able to sustain themselves financially and engage the thinking and know-how of the full spectrum of people and institutions with a stake in making our communities better places to live and work.

But in placing greater demands on charities and ratcheting up expectations for how they perform, many funders seem to be in denial about the investment charities need to meet those demands and expectations.

Most charities are small, community-based groups with limited resources.
Their employees are overworked and underpaid and often lack the skills or know-how they need to keep their shops financially afloat.

Their boards often are not willing to raise money or set a vision and direction for the organization, and typically are not even aware those are key responsibilities of their board role.

The recession has increased demand for services from charities and reduced the dollars available to them in what has become a fiercely competitive charitable marketplace.

And foundations and corporations typically will not support charitable operations, preferring to fund special projects and address particular needs in sync with their mission or business goals.

So while they expect charities to be more enterprising, efficient, effective and strategic, funders are not willing to make the significant investment charities need to improve the way they do business.

After the Haiti earthquake, savvy charities used social-media strategies like text-messaging to raise a lot of money quickly.

Aiding that effort was massive coverage by mass media that used the power of images and technology to communicate both the intimacy and the massive scale of devastation in a nation long ground down by poverty.

Yet while they are quick to provide wall-to-wall coverage of horrific disasters in their immediate wake, the media fail to tell the ongoing story of the relentless toll poverty takes throughout America and the world.

And while nonprofits serve on the front lines in the fight against poverty, their limited resources make it tough for them to more effectively tell their story to the mass audience mass media can reach.

Nonprofits need all the help they can get, including greater understanding and flexibility among foundations and corporations that control charitable resources nonprofits can use to do a better job running their organizations, serving people in need, and telling their stories to engage more people in their cause.

Todd Cohen, a veteran news reporter and editor, is editor and publisher of Philanthropy Journal, an online newspaper that is a program of the Institute for Nonprofits at North Carolina State University in Raleigh. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world..

Posted by Samantha Penabad

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28 Days of Black Nonprofit Leaders: Erica Hunt

This post is part of a special series by Rosetta Thurman entitled “28 Days of Black Nonprofit Leaders.” In honor of Black History Month, Rosetta will be “highlighting 28 Black nonprofit leaders who have done or are doing their part to make our world a bit better, a bit more hopeful for the generations that will come.”

In her introduction to the series on her blog, Rosetta writes, “I love Black History Month because it reminds me of how far we still have to go in this country in terms of race relations and giving everyone a fair chance to take part in the “American Dream.” How far we still have to go before Dr. Martin Luther King’s dream of social justice and economic opportunity for everyone will be realized. Fortunately, there are countless leaders out there who are continuing to address so many aspects of social change.” The SSIR is proud to publish some of their stories.

If you run in social justice philanthropy circles, you’ve probably heard of Erica Hunt, President of the Twenty-First Century Foundation in New York. What you may NOT know is that Erica Hunt is also a marvelous poet.  A woman after my own English major, free verse-loving heart.

From the Twenty-First Century Foundation website:

Erica Hunt, a leading expert on Black social justice and economic issues, was a Senior Program Officer with the New World Foundation, before joining 21CF in 1998 where she has led new work in the field of Black philanthropy. During her tenure, 21CF has sought to strengthen Black giving and community-based philanthropy through donor education; grant making through donor-advised funds and special national initiatives; and applied research to document trends in Black philanthropy and community impact. Under her supervision, 21CF has grown from an all volunteer organization, to a premier national $8 million public foundation. Hunt holds a B.A. in Literature from San Francisco State University, and is a past Fellow in the Duke University/University of Cape Town Center for Leadership and Public Values. She currently serves as a participant to Diversity and Effectiveness in Philanthropy; the International Working Group on Philanthropy for Social Justice and Peace; and Rye Collaborative National Progressive Foundations. Her past professional leadership affiliations include: the New York Regional Association of Grantmakers; National Center for Black Philanthropy, and the Coalition for New Philanthropy. Hunt, a published author of numerous articles and essays on Black philanthropy, was the 2008 recipient of Spelman College’s award for National Community Service.

From the Center for Programs in Contemporary Writing at the University of Pennsylvania:

Erica Hunt works at the forefront of experimental poetry and poetics, critical race theory, and feminist aesthetics. She has written three books of poetry: Arcade, with artist Alison Saar, Piece Logic, and Local History (Roof Books, 1993). Her published and forthcoming essays include “Notes for an Oppositional Poetics” (The Politics of Poetic Form,, ed. Charles Bernstein), “Parabolay” (Boundary 2), and “Roots of the Black Avant Garde” (Tripwire, forthcoming). Hunt’s poems can be found in Moving Borders: Three Decades of Innovative Writing by Women (ed. Mary Margaret Sloan), Iowa Poetry Review, and the Virago Anthology of Women’s Love Poetry. Hunt has also worked as a housing organizer, radio producer, poetry teacher, and program officer for a social justice campaign. She is currently president of The Twenty-First Century Foundation which supports organizations addressing root causes of social injustice impacting the Black community.

See also: A complete audio archive of Erica Hunt reading her poetry hosted on the PennSound website

Photo credit: BMoreNews.com

Rosetta Thurman is a writer, speaker, professor and consultant working and living in the Washington, D.C. area.  She holds a Master’s degree in Nonprofit Management and blogs about nonprofits, leadership and social change at rosettathurman.com

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28 Days of Black Nonprofit Leaders: Emmett Carson

This post is part of a special series by Rosetta Thurman entitled “28 Days of Black Nonprofit Leaders.” In honor of Black History Month, Rosetta will be “highlighting 28 Black nonprofit leaders who have done or are doing their part to make our world a bit better, a bit more hopeful for the generations that will come.”

In her introduction to the series on her blog, Rosetta writes, “I love Black History Month because it reminds me of how far we still have to go in this country in terms of race relations and giving everyone a fair chance to take part in the “American Dream.” How far we still have to go before Dr. Martin Luther King’s dream of social justice and economic opportunity for everyone will be realized. Fortunately, there are countless leaders out there who are continuing to address so many aspects of social change.” The SSIR is proud to publish some of their stories.

Dr. Emmett Carson is the founding CEO and president of Silicon Valley Community Foundation.

From the Silicon Valley Community Foundation website:

Hired in 2006 to establish a new, regional community foundation from the unprecedented merger of Peninsula Community Foundation and Community Foundation Silicon Valley, Emmett is responsible for providing the vision for one of the largest community foundations in the United States with assets of $1.7 billion.

Before coming to Silicon Valley, Emmett served as president and CEO of The Minneapolis Foundation for 12 years. During his tenure, the foundation received national recognition for its grantmaking in the areas of housing, immigration and education.

An inspiring public speaker, Emmett has devoted his career to being a catalyst for positive social change and has authored more than 100 works on philanthropy and social justice. He served as the first manager of the Ford Foundation’s worldwide grantmaking program on philanthropy and the nonprofit sector and his seminal work on African American giving and volunteering at the Joint Center for Political and Economic Studies is widely seen as helping to spark broad public interest in ethnic philanthropy studies.

In addition to serving on numerous nonprofit boards, he has conducted workshops on endowment building for nongovernmental organizations in southern Africa and participated in international efforts to develop best practices within the field of philanthropy. He has received numerous awards, including honorary degrees from Indiana University, Morehouse College and The National Hispanic University.

A native of Chicago, Emmett received both his master’s and Ph.D. degrees in public and international affairs from Princeton University and his bachelor’s degree in economics, Phi Beta Kappa, from Morehouse College. He is married to Jacqueline Copeland-Carson, Ph.D.

See also: Emmett’s 2007 Interview with the Stanford Social Innovation Review

See also: Emmett’s 2006 Interview with the Foundation Center

Photo credit: Silicon Valley Community Foundation

Rosetta Thurman is a writer, speaker, professor and consultant working and living in the Washington, D.C. area.  She holds a Master’s degree in Nonprofit Management and blogs about nonprofits, leadership and social change at rosettathurman.com

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Correlations Between Being a Great Teacher and Being a Great Nonprofit

When my colleagues discuss nonprofit organizations, often they use a variety of analogies and comparisons. Sometimes an analogy is made between a nonprofit and a hospital, often discussing the nonprofits challenges with words relating to “surgery” or at times “life support.” Sometimes they are compared to a car, comparing the various engine parts to the sections of a nonprofit. The comparison I like and most often use is comparing a nonprofit to an elementary school classroom. Having recently volunteered in my son’s Pre-K classroom I know that I could be simultaneously leading a reading group, cleaning up a mess and consoling a crying youngster. Nonprofit organizations, like a classroom, have many moving parts.

I was thinking about this after I read an interesting article in the January 2010 edition of The Atlantic. The article, by Amanda Ripley, asks the central question of “What makes a great teacher?” In getting to this question, Ripley was given access to years of data compiled by the nonprofit group, Teach for America (TFA).  Through this analysis, TFA came to some central characteristics that make up a great teacher. They concluded that great teachers:

• Set big goals for their students.
• Continually look for ways to improve their effectiveness and constantly reevaluate their performance.
• Recruited students and their families into the process.
• Maintained focus, “ensuring that everything they did contributed to student learning”.
• Planned “exhaustively and purposefully—for the next day or the year ahead—by working backward from the desired outcome”
• Worked “relentlessly, refusing to surrender to the combined menaces of poverty, bureaucracy, and budgetary shortfalls.”

When I looked at these characteristics I began thinking about the earlier classroom analogy between a great teacher and a great nonprofit. My thoughts on the comparisons, using additional analogies, are:

• Most nonprofit have lofty dreams. The difference between these nonprofits and great ones is that a great nonprofit’s mission and vision should remain lofty but its closely related goals are realistic and attainable. Many nonprofits often drive in circles toward what they believe is a goal, but really are endlessly driving around that lofty dream.

• Great nonprofits know that their march toward mission effectiveness is a constant working of a muscle, often adding a weight to the bar or altering a routine to reach their potential.  Often times ambitious nonprofits approach effectiveness like an audit, performing a Jiffy Lube exercise of creating and monitoring checklists to reach “effectiveness”.  Great nonprofits know their dashboard is on a moving trajectory that they are constantly working toward.

• Great nonprofits create an environment in which multiple players all have parts in their symphony, each one important.  Many nonprofits have conditioned themselves to believe that real participation into their success is to involve clients and partners in an obligatory bit role, ranging in activities like providing a feedback box for staff or having client representation on an executive or board committee.  Great nonprofits know that client and partner interaction needs to be intertwined into the operational fabric of the organization.

• Great organizations are experts at saying the word “No”.  “No” to Requests for Proposals that don’t meet the mission, “No” to a board member’s ambition that could take the organization astray, “No” to staff working from their own agenda, “No” to partners wishing to collaborate solely to obtain a resource.  While you may think that the word “No” creates an unmotivated environment, it’s actually the opposite in a great nonprofit.  The loud roar of the “Yes” significantly drowns out the diminishing whisper of the “No”.

• An easy test I often use when looking at an organization is to see if the threads of planning at the top reach the day-to-day work in the middle or at the bottom.  Successful nonprofit organizations are able to plan and create mechanisms to monitor planning throughout the organization.  Try this exercise: Grab an organization’s strategic plan, the ED’s most recent report to the board, the job description of a middle manager and that middle manager’s latest performance review.  Can you see some symmetry?  Poor organizations have little, average organizations have some and great nonprofits have a lot.

• Great nonprofits also say “No” to barriers that prevent them from mission success.  “No” to political roadblocks that may shut them out, “No” to technological forces that challenge them to connect and “No” to resource inflows that could be narrowing.  Like great teachers, great nonprofits are “relentless” and “refuse to surrender”.  This is what I like to call “Third Sector Grit” and is what makes the nonprofit world so great.

While I know that the classroom also has aspects that are different from a nonprofit, I do see a very close relationship to what TFA regards as a great teacher to what I regard as a great nonprofit.

John Brothers the Principal of Cuidiu Consulting, a Senior Fellow in executive leadership with the Support Center for Nonprofit Management, and an adjunct professor at New York University’s Wagner School for Public Service.

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In a Changing Ecosystem, Whither Nonprofits?

I’m concerned about nonprofits. Are they aware of the threats they face?

Are they prepared to demonstrate their value in the face of changes in corporate and tax law, and, as importantly, changes in the cultural zeitgeist about social capital markets and social enterprise?

For almost a century, 501c3 nonprofits have held a privileged place in our communities and in our tax code. They are provided tax exempt status, and supporters can deduct their contributions to these organizations from their income taxes. In so doing, the US tax code privileges these organizations - from major hospitals and universities to small neighborhood groups - as providers of social goods and contributors to civil society.

Those privileges are being challenged from numerous directions. Let me list just a few:

• New corporate forms that recognize social businesses (these are modifications to the corporate codes at state levels - L3Cs, B Corporations, proposed H corporation);
• Tax credits for social businesses;
• Foundations’ increasing interest in “sector agnostic” approaches to solving social problems;
• Regulatory concern about good governance, payout rates, and endowment growth over charitable purpose;
• Social investment exchanges that are expanding the revenue and capital streams to financial/social hybrids (not necessarily to nonprofits);
• Growth of models for social goods/civil society that emphasize operating foundations or social enterprises more than a nonprofit framework (everywhere but USA).

Each of the innovations above has advantages and disadvantages and none may be explicitly targeted at putting nonprofits out of business. Most of the hybrid forms are promoted as expansions of the social sector.  The fervent interest in social investment exchanges and mission related investing or impact investing are also seen as new revenue sources to good. Note, however, that these are effectively ways of expanding the pools of social good providers and social good financing, effectively increasing the pool around nonprofits, not working to strengthen, support or expand financing to them.

What we are experiencing is a confluence of forces, each of which may have merit independently, but which collectively challenge our current framework (policies, mental models. and financing systems) for where civil society and social goods come from.

Who provides them, who finances them, and how are they distributed?

Michael Edwards’ new book, Small Change, which challenges the currently en vogue market model, comes closest to raising these questions.  And conferences on regulation, discussions of technological innovations, and celebrations of innovations and changing ecosystems contribute to the broad awareness of options.

But who is working on these big questions in pragmatic ways? Who is looking at what nonprofits do best, what social enterprises and social businesses contribute, and what roles government can and must play? Who is looking out for the whole? Or even looking at the intersections, not all of which are complementary or positive, of these many pieces?

Currently, most of the innovation in the sector is around the edges of our existing corporate and tax frameworks - we are developing “workarounds” to the 501c3 or commercial corporate model to encourage social entrepreneurs and new investors or donors.

The preponderance of these workarounds should have been our first clue - it is time to reconsider the entirety of the systems and policies for the production, financing and distribution of social goods and civil society in the Twenty First century.

Lucy Bernholz is the founder and president of Blueprint Research & Design, Inc, a strategy consulting firm that helps philanthropic individuals and institutions achieve their missions. She is the publisher of Philanthropy2173, an award winning blog about the business of giving and serves as executive producer of The Giving Channel on Fora.tv.

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Five Ways to Emerge as a Nonprofit Leader

Hildy Gottlieb’s latest post has got me to thinking more about the so-called generational leadership gap in nonprofit organizations. She and I agree that there is not really a “gap” in leadership. What we really have is an ongoing disconnect around the myth that young people aren’t yet “ready” to take the reigns from current leaders .  . . when it’s clear that we absolutely are. This inability for many older leaders to pass the torch is partly what causes young people to become disenchanted with nonprofit work and often underperform in their current roles. Many young nonprofit professionals are waiting until they get the title of “Director” to lead. They are waiting until their older colleagues deem them “ready” to lead instead of emerging as leaders in the here and now. But what we have to understand is that this behavior doesn’t benefit our organizations nor the communities we seek to serve. What we have to understand is that we need as many young people as possible to emerge as nonprofit leaders, even if they don’t have a title. The future of the nonprofit sector depends on it.

Leadership theorist Peter Northouse outlines the fundamental difference between assigned and emergent leadership in his book Leadership Theory and Practice.  He asserts that assigned leadership is based on being hired into a particular position in an organization: “Executive Director/CEO” or “Development Director” or “Senior Vice President” etc. Assigned leadership is based on having a certain title in an organization that automatically deems you a leader. Northouse points out, however, that assigned leaders are not always necessarily perceive as the “real leader” of the organization. For instance, they may be the big boss, but the only reason their employees obey them is because they fear getting fired.

In contrast, emergent leadership is exhibited when an individual is perceived to have influence in a group or organization, regardless of their title. How does this happen?

In his 1974 book Small Group Decision Making: Communication and the Group Process, B. Aubrey Fisher proposed that successful leader emergence happens over time as a result of several positive communications behaviors. He said that one could emerge as a leader without being assigned a title if one exhibited the following behaviors:

Be Verbally Involved

This means, speak up! The more you insert your voice into the decision-making process of your organization, the more visible you become to everyone. Ask questions, even if you think they’re dumb. Don’t just be a head nodder, speak up and verbalize why you agree with a certain decision. Likewise, if you disagree with a decision that’s being made, say so. And explain why. People may not agree with you, but they will respect you for speaking your mind. Many times, the other people around the table are thinking the same thing you are. If you get the opportunity to lead a meeting, do it! And if you have rotating staff meetings, volunteer to run one of them.

Be Informed

Stay abreast of what’s happening in your nonprofit and your field. Being knowledgeable can give you an edge in your work as well as earn you a reputation as an “expert” within your organization. Read all of your own organization’s newsletters and annual reports. Examine your own 990s on Guidestar. Using social media as your news feed can definitely help you stay informed, as Elisa commented on this blog recently:

Twitter has definitely helped my career! It has helped me build my knowledge base on nonprofit best practices, resources and technology which has allowed me to contribute intelligently to conversations within the office and provide evidence to back up my statements. In the last couple of places I’ve worked, I’ve also been one of the first people to find out about late breaking news or important new resources that have just come out relevant to our work. Both of these things have helped me build my ‘clout’ within the office and made me a more indispensable employee.

Seek Others’ Opinions

Many times, the opinions of young people can be discounted because of our age. On some, “what does this kid think she knows?” It’s not right, but it still happens. It may be fair to call this reverse ageism, but it won’t help to go around accusing people in your organization of being ageist. No one likes to be called names, even if the shoe fits. Instead, consider asking older colleagues what they think of your ideas before you present them. That way you’ll be able to tweak them if they bring up an angle you haven’t thought about, and they can support you when it’s time to possibly implement your idea within the organization.

Initiate New Ideas

You know you have great ideas. I know you have great ideas. But does anyone else? It doesn’t help your organization for you to sit still and silent when you have a way to improve the way your nonprofit provides services or help save your nonprofit money. I once worked at an organization where we were paying a ton for health insurance for all our employees because no one had the time to do the research to see if there were any comparable, but less expensive plans out there. If someone had taken that on as a stretch assignment, it would have been a great idea and extremely helpful to our bottom line.

Be Firm But Not Rigid

We learn about a lot of great theories in grad school. We read a lot of management books. We know how to use a lot of great social media tools. We may think we know a thing or two. And we do. But we also have to remember that our ideas are not the only ideas. They may not even be the best ideas. If you present an idea and nobody else is into it, don’t write them all off as ageist losers, but continue to work with your colleagues to come up with something that makes sense to everyone. It pays to know your stuff, but you can’t be so rigid that it’s “your way or the highway.”

What are some ways that you’ve been able to lead within your organization (or in your community) without having a title? How else would you interpret Fisher’s five suggested behaviors?

Image credit: Lynn’s Little Bit of Trivia

Rosetta Thurman is a writer, speaker, professor and consultant working and living in the Washington, D.C. area.  She holds a Master’s degree in Nonprofit Management and blogs about nonprofits, leadership and social change at rosettathurman.com

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10 Free Things Every New Social Entrepreneur Should Have

A successful social entrepreneur is scrappy and resourceful. They know how to do more with less, and create a social impact while doing so. The 10 resources below are free monetarily, but each is an invaluable tool for launching and sustaining a lean social enterprise.

1. Interns. Treat them well, give them meaningful projects, and make it worth their while. Most universities even offer credit for coursework, so contact a university’s marketing, nonprofit, or social work departments. You can also post opportunities for free on Enternships and InternshipIn.

2. A good lawyer. Unless you’re also a lawyer, you’re going to need to find someone with legal expertise to help you navigate contracts and ensure you comply with state and federal law. Fortunately, many lawyers are generous enough to donate a portion of their time to pro bono projects. CorporateProBono, a national initiative of the American Corporate Counsel Association, plays “matchmaker” between nonprofits and such generous attorneys.

3. 501(c)3 status. Okay you can’t skirt paying for filing these forms, but you can save by filing them yourself. Yes, it’s time consuming and challenging; but I guarantee your journey ahead will be even more so. When I was trying to incorporate Yoga Bear as a 501(c)3, I used the Nolo Guide Starting & Building a Nonprofit, which I borrowed from the local library.

4. Board Members. Finding directors with complementary skills, as well as the experience and spirit of public service to guide your organization is essential. Post your opportunities on BoardNetUSA, BoardSource, and VolunteerMatch.

5. Local Support. Know thy neighbor. Regardless if your initiative is hyper-local or entirely global, get involved with the local changemaker movement. A great place to start is joining the listserv of your local YNPN chapter. You’ll be added to an e-mail list that exchanges ideas, questions, local news, and events.

6. Global Exposure. It goes without saying that you will need to create a Twitter Account and Facebook Page, at the very least. Use Namechk to see if your organization’s username is still available. Even if you don’t plan on starting a YouTube page, claim the name now.

7. Collaboration and management tools. These tools are especially important if volunteers and team members are geographically dispersed. Google Docs or PBworks are two excellent (and free) products that will allow you to coordinate work on documents and spreadsheets. And the Salesforce Foundation donates CRM product licenses to qualified nonprofits.

8. A great logo. I am far from an artist, but I am proud to say that I created the Yoga Bear logo using stock photo art and a free version of Photoshop. Try GIMP, a free Photoshop-like software and their free tutorials to learn how.

9. A Web site. Your home on the web. Depending on your needs and programming skills, there are a plethora of options. If you know a bit of HTML, try Ning to create a homepage with social network features like message boards and a blog (this is what we use for YogaBear). Or if you need an easy drag-and-drop interface, use Weebly.

10. An Understanding of the Space. Knowledge of the work being done in your niche can open doors and opportunities to key players. Create a Google alert (such as “homelessness AND Detroit” or “cancer AND yoga”) to receive daily or weekly emails with links to news stories using these keywords. You’ll start to learn who is making strides in the domain, and be able to reach out to those teams. Keep in mind that there are no competitors, as long as everyone has the same mission.

This is far from a comprehensive list of the amazing free tools out there. Please share! What have you used to launch and sustain a successful social enterprise?

Halle Tecco is a San Francisco resident and social entrepreneur passionate about technology, service and healthy living. She is the Founder and Executive Director of Yoga Bear, a non-profit providing more opportunities of health and wellness to cancer patients through the practice of yoga. Halle has worked as a Product Manager at various consumer-internet startups, including Enternships.com and Kiva.org. She also serves as an advisor to GreatNonprofits.org. She is pursuing her MBA at Harvard Business School and will graduate in 2011.

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For Collaboration Geeks: The Lodestar Database on Collaboration Models is Up and Running!

I love hearing about creative ways that nonprofit organizations combine program and corporate structures in order to expand their impact. If it’s change that results in helping more people then I am always interested in what the nonprofit leaders are up to. If you are like me and curious about new ways people are using strategic re-structuring strategies, then you will love the new Nonprofit Collaboration Database created through the Lodestar Foundation,  based at the University of Arizona. This is a searchable database consisting of 176 collaboration models submitted by nonprofit organizations to the Lodestar Foundation’s 2009 Collaboration Prize.  The Collaboration Prize competition awards $250,000 to the top nonprofit collaboration and has been awarded only once so far.  The nominators provided the information on the database and it’s possible to trace back to the organizations involved to discuss their collaborations with them directly.

The database allows you to perform many search combinations, and modify the searchable criteria. Users can find matches to even the most complex of searches, for example, groups of three or more nonprofits which formed a federation to co-locate their programs only in the southwestern United States. The goal is for researchers to use the database to identify interesting trends or to learn about effective ways to use strategic re-structuring strategies for nonprofits.

In the past, little information was accessible to nonprofit leaders and stakeholders about nonprofit collaborations of any kind. Today, as a result of efforts like the Lodestar Foundation’s database, much more information is available. This increased availability drives new research on corporate structure and the fairly new set of strategies that support collaboration.

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

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“Flag on the Play” for a Multi-Million Dollar Nonprofit

Two February 7th Events – One nonprofit rose over $450 million dollars and the other worked toward a goal of $15,000.  Which one is the true nonprofit organization?

On February 7th, the Courage Center held its 4th annual benefit for Camp Courage, which offers safe, accessible, natural environments for children with disabilities.  Founded in Minnesota in 1928, the Courage Center is a nonprofit organization that set a goal of $15,000 dollars for its Dance with Courage event.

On the same day, the National Football League (NFL), a registered nonprofit organization, successfully raised an estimated $463 million dollars through its annual Super Bowl event, according to Sports Research Institute.  The event was seen by over 100 million people and an estimated 112,000 people were in attendance.  Some other interesting facts include:

• The highest donation category for the Camp Courage event was the “Mikhail Baryshnikov” level at $100.  The Super Bowl sold 30-second commercial advertising space for approximately $2.6 million dollars a spot. 
• The NFL’s CEO Roger Goodell is reportedly paid over $10 million dollars, which is approximately three times more than the top nonprofit CEO salary cited by Money Magazine, James Mongan of Partners HealthCare Systems in Massachusetts.  Mr. Goodell makes nearly 44 times more than the CEO at the Courage Center according to 990 records.
• The NFL has 13 subsidiaries, seven of them tax exempt.  The smallest of the seven tax exempt subsidiaries are those that are dedicated toward philanthropic causes, including NFL Charities and the NFL Youth Fund.  Rick Cohen, in his Nonprofit Quarterly blog The Cohen Report (8/12/08), cited that in the 2005 990, the NFL gave away to charitable causes slightly under $10 million dollars.  This is approximately one tenth of 1% of its annual revenue.  Foundations are required by law to distribute annually at least 5 percent of their net assets.
• The NFL’s 2009 annual revenue is $7.6 Billion dollars, according to Forbes Magazine.  That would make it over $2 billion more in revenue than the Mayo Foundation, the largest U.S. charity cited by Forbes.  The league’s least valued team, the Oakland Raiders at $797 million dollars, is greater than many large for-profit companies.

Something is wrong with this scenario.  I am not sure if the NFL truly complies with the nonprofit corporation definition of operating for educational, charitable, social, religious, civic or humanitarian purposes.

While the proceeds of the Camp Courage event will be dedicated toward advancing the lives of children and adults experiencing barriers to health and independence, the proceeds of the Super Bowl will go to the NFL’s mission of “promoting interests of its 32 member clubs”.  The mission statement originally filed by the NFL is unknown.  According to Josh Peter of the New Orleans Times-Picayune, the “NFL said it has lost its copy of the application it filed with the IRS in 1942, and the IRS also said it was unable to find a copy of the application.” 

I guess this is equal to the dog eating your homework and so I am sure advancing the interests of the Washington Redskins is equal to the missions of organizations like the Courage Center or smaller “folding-table organizations” that earn their non-profit status each and every day.
 
I am an avid football fan.  I played throughout high school and college.  I enjoy a Vikings or Jets game on Sundays.  That said, there is something very wrong about the NFL being a tax exempt organization and my greatest challenge is how the nonprofit sector can be manipulated in this way.  What is even more worrisome is how much more other tax exempt statuses are being manipulated in this fashion. 

John Brothers the Principal of Cuidiu Consulting, a Senior Fellow in executive leadership with the Support Center for Nonprofit Management, and an adjunct professor at New York University’s Wagner School for Public Service.

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Third Sector Grit

Grit, as defined by Webster’s Dictionary, is a “firmness of mind or spirit, unyielding courage in the face of hardship or danger”.  Tales by Robert Louis Stevenson or the movie The Red Balloon were the stories of my childhood that got to the essence of “grit”.  Recent movies like Life Is Beautiful, Shawshank Redemption and Slumdog Millionaire are examples of modern stories that outline that grit is still popular.

The nonprofit sector is great for many reasons, but one of the main reasons for its greatness is what I term, “Third Sector Grit” and it lives out every day to the many stories of unyielding courage in the face of hardship or danger.  It is a quality that is overly abundant and at times minimized in the face of “innovation”.  Third Sector Grit is most times not the stories of the sector’s executive leaders; more often it refers to those community champions in each nonprofit who do not have the larger titles but who are individuals that the organization could not move forward without.  I would venture to say that the definition of Third Sector Grit are the individuals and stories in each nonprofit that showcase its most valuable asset, the ‘firmness of spirit and unyielding courage in the face of the hardship’ toward fulfilling its mission.

I led an organization through a merger a couple years ago and we were discussing the immersion of staff between the organizations.  Through this process some staff cuts were planned for and nearly every staff member within the organization fought tooth and nail for a long-term administrative assistant.  This person came to resemble the heart and soul of the organization and when the others described her, they described the many courageous acts that she had taken, without recognition, putting herself in very difficult circumstances.  She lived and bled the organization and if Third Sector Grit was in the dictionary, her picture would be right there, smiling.

Recently I attended an event with many corporate social responsibility leaders throughout the United States.  Networking with several beforehand, they spent much of their time talking about the amazing stories of their grantees or their site visits they had made to “the field”.  They called them their “war stories”.  The ensuing luncheon peppered various inspiring tales about their work with their nonprofit partners.  Nearly every conversation outlined Third Sector Grit and it served as one of the major motivating forces behind this convening of these corporate philanthropy leaders.  If I could have bottled Third Sector Grit, I would have sold it by the truckload.

Third Sector Grit is the main motivating force to why I work in the sector.  I have many stories and love to share them.  From the boxing coach in Washington State who used his pet orangutan to build relationships with young people to the two former drug dealers who turned their lives around following the death of a family member to start a touch football league to the counselor who works with lonely seniors each Saturday in the back room of an Embers.  Talk to most in the nonprofit sector and you will get Grit stories all day.

As part of my regular blog postings with the Stanford Social Innovation Review, I will periodically feature a “Third Sector Grit” story.  If you have one that you would like to share, please feel free to send to me as I may highlight.  My e-mail is john@cuidiuconsulting.com Look forward to hearing from you!

John Brothers the Principal of Cuidiu Consulting, a Senior Fellow in executive leadership with the Support Center for Nonprofit Management, and an adjunct professor at New York University’s Wagner School for Public Service. He is also a Visiting Scholar at the Hauser Center for Nonprofit Organizations at Harvard.

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The Normative Problem with the Term ‘Next Generation’ Leaders

Earlier this year, I profiled four “now generation” leaders to watch because they are, and will be, doing amazing things for social change in the next year.  But the main reason I wanted to coin the term ‘now generation’ is because I think the ‘next generation’ moniker gives young people (and everyone else) the sense that we have to wait for some undetermined time before we can lead. We have to wait until someone hands us the baton. We have to sit on the sidelines until someone passes us the ball. And until then, we’ve got to sit quietly with the other kids and try to catch the crumbs of wisdom and power that fall from the big kid’s table. We’ve got to wait until we get “next.”

If that’s what we mean by ‘next generation’ leaders, I sure don’t want to be one. To be clear, I don’t see anything wrong with the term in and of itself, but rather how it may be being used to reinforce the current distribution of power in the nonprofit sector.

The Normative Problem

In some ways, I see the term ‘next generation’ being used to further the normative problem we have in nonprofits. Harvard professor and scholar Ron Heifetz talks about how “normative issues” in leadership can make it difficult for new leaders to emerge. Basically, the term ‘normative’ means relating to an ideal model or standard for something, i.e. the “norm.” Heifetz says that we have a normative problem when a community believes collectively that leaders have certain characteristics like age, experience, pedigree, etc. And when a community believes that leaders come packaged in a particular way, they are more likely to wait for those types of leaders to come, instead of allowing different kinds of leaders to emerge. By saying ‘next generation’ leaders, I think we may be implying that young people are up “next” when we reach a certain age or level of experience, which is, in effect “the norm” for current leadership.

‘Next Generation’ Leaders are Not That Young

Most characterizations of the ‘next generation’ assume that these leaders are much younger than current leaders. Hence, the waiting “until we get old enough” connotation. But the reality is that young nonprofit leaders who are typically referenced as the ‘next generation’ are not as young as people think. We’re not all college kids anymore. This year, the oldest of Generation Y will be 30 years old. We’re no longer the “baby” in the workplace, we’re managers and directors and CEOs of great organizations. In short, the young professionals I’ve been talking about on this blog for three years have quickly become the ‘now generation.’ But I’m not sure the term ‘next generation’ takes that into account.

Who Decides When ‘Next Generation’ Leaders Become ‘Now Generation’ Leaders?

Having a cadre of bright young leaders in the nonprofit sector is great, but typecasting us as the ‘next generation’can also indicate that we need someone from up on high to deem us “ready” to lead when our time comes. Using the term can make it seem as if young people will lead after all the Baby Boomers are gone, however we all know that’s not gonna happen anytime soon. Baby Boomers are staying in their jobs longer as a result of the economic downturn, and many are taking on “encore careers” as nonprofit leaders. So it’s up to us, the young nonprofit leaders, to redefine who gets to say when we’re ready to lead. It can’t be our bosses, our mentors, or some older and wiser colleague. It is we who must decide for ourselves whether and when we will lead. I’ve heard too many stories of young people who come into the nonprofit sector, do their jobs well, and wait to be promoted or included or at the very least, heard. What I’ve realized in hearing these stories is that if young people wait for approval from their organizations to lead, if we wait for someone to deem us worthy of leadership opportunities, it will never happen. We have to make our own opportunities. Malcolm X once said (my brackets), “Nobody can give you freedom. Nobody can give you equality or justice or anything. If you’re a man [or woman], you take it.” I want to see us take it.

So the new question I think we need to ask ourselves is not what we will do as ‘next generation’ nonprofit leaders, but what we are already doing to lead right now today. How do you answer that question for yourself? Do you consider yourself to be a ‘next generation’ leader?

Rosetta Thurman is a writer, speaker, professor and consultant working and living in the Washington, D.C. area.  She holds a Master’s degree in Nonprofit Management and blogs about nonprofits, leadership and social change at rosettathurman.com

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Subtle Nudges for Greater Good

Many psychologists, writers and other students of human nature have reached the same conclusion: people are usually too distracted, tired, scared, or just plain lazy to act on their best intentions. But few of these observers suggest how us humans might overcome our less noble tendencies.

Scientists at a recent Stanford Center for Social Innovation conference, however, presented a bevy of tactics for transforming even the most bumbling schlemiel into a model citizen. Called “Small Steps, Big Leaps: The Science of Getting People to do the Right Thing,” the event showcased how to use gentle nudges, subtle tweaks, and quiet prompts to summon better behavior. 

One of the most overlooked strategies for getting people to be generous, for instance, is actually to ask them, related Frank Flynn of Stanford Graduate School of Business. Flynn discussed his experiments showing that one barrier to “the ask” is that people grossly underestimate how often their requests for help will be honored. And if at first you do not succeed, then ask, ask again, he recommended, presenting findings that people who say “no” to an initial ask are more likely to say “yes” to a subsequent one.

You need not even tell people how much to give, noted Leif Nelson of the University of California, Berkeley’s Haas School of Business. His findings show that people sometimes donate more when they get to set the amount.

And you need not feel guilty about asking people to help, because you may actually be doing them a favor, suggested Mike Norton of Harvard Business School. His studies reveal that giving people the chance to help others can improve everything from their mood to their dodge-ball game.

Even better than asking people to take the high road is making the high road the easiest one to take, argued Eric Johnson of the Columbia School of Business. When policies and practices turn good behavior into the default option, people tend to act more ethically—or, as Johnson put it, “There’s something very special about doing nothing.” For example, in countries where people have to take the trouble to opt out of organ donation—a post-death benevolence that many societies value—vastly more people donate their organs than do in countries like the United States, where people have to go out of their way to opt in to organ donation. Likewise, people save more money when their employers automatically enroll them in retirement savings programs and use less energy when florescent bulbs are the only light in town. (For more about defaults, see “Helping the Poor Save More” in the winter 2010 Stanford Social Innovation Review.)

If you must trouble yourself with framing a message, several researchers revealed how simple shifts in wording can spell the difference between vice and virtue. Just mentioning money can throw people off their altruism game, showed Kathleen Vohs of the University of Minnesota’s Carlson School of Management. Her experiments demonstrate that even minor references to cash make people stingier and less sensitive to suffering—even their own. For fundraisers whose job is to ask people for money, Vohs’ findings could inspire dismay. But she has an antidote: First ask people to donate their time, and then ask them to donate their money.

Noah Goldstein of UCLA’s Anderson School of Management similarly showed the power of getting words right. Public service announcements and other social good campaigns often communicate that everybody pollutes, steals, carouses, or otherwise behaves badly—but you shouldn’t. (“Only YOU can prevent forest fires!” exhorts Smokey Bear.) Yet humans are herd animals; and so despite our claims to uniqueness and independence, we tend to follow the crowd. As a result, campaigns that imply that the crowd is up to no good often backfire: A sign in Arizona’s Petrified Forest reporting that visitors purloin some 14 tons of wood per year, for example, doesn’t deter such theft—it encourages theft.

A better way, said Goldstein, is to convey that most people are doing the right thing—and you should, too. Accordingly, a sign saying that most guests conserved water by reusing their towels (rather than having them laundered) inspires far more towel reuse than does a sign lamenting how many guests waste water. 

Pictures and stories that put a human face on an issue can also steer people towards right action, related Adam Grant of the University of Pennsylvania’s Wharton School. Radiologists read X-rays more accurately when they see a picture of the bones’ owners, Grant showed, and lifeguards work harder after hearing stories about heroic water rescues.

Putting people in the driver’s seat of their own narratives also works wonders, reported Steve Cole of HopeLab, a Redwood City, Calif.-based company that makes health-promoting products for children with chronic diseases. In HopeLab’s first-person shooter video game, Re-Mission, for example, kids recovering from cancer travel through the human body and, with the help of medicines, blast would-be cancer cells out of their paths. The game is clinically proven to help kids take their post-chemotherapy maintenance drugs—a crucial, yet difficult step in their recovery.

Nonprofits too must control their own narratives, warned Jennifer Aaker of the Stanford Graduate School of Business. She presented data showing that nonprofits suffer from the stereotype of being warm and caring, but not very competent. To boost donations and public confidence, nonprofits need to advertise their business acumen.

But perhaps they should do so softly, for the resounding message throughout the conference was this: You need not scream and push when a
whisper and a nudge will do. That’s advice that even the most distracted, tired, scared and even lazy social innovator can get behind.

Alana Conner, PhD is the senior editor of the Stanford Social Innovation Review. A social science writer, editor, and consultant whose specialty is cultural psychology, Alana received her doctorate in social psychology from Stanford University and her postdoctoral certificate in psychology and medicine from the University of California, San Francisco. In addition to her blog, Alana has written for a number of venues including The New York Times Magazine and Static.

Posted by Samantha Penabad

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Squeezing the Dollars Until They Holler

Historians can address this question with greater certainty, but I don’t think it was ever the case that nonprofit organizations were expected to sit rouged and powdered, waiting at the window for their financial suitors to come calling.  Whether chartered by wealthy donors or not, it was always assumed they would walk the streets a bit, hustling a buck here, a buck there, to support their operations.

The amount of hustling most nonprofits do just to keep the lights on has gotten out of hand.

From the outside, the sector looks pretty healthy, financially.  A recent MSNBC article, for example, reports on the sector’s increasing economic clout:

Spurred by a growing number of global conflicts, increased outsourcing of aid work by Western governments and the boom in private philanthropy, nongovernmental organizations like Oxfam have become big businesses. The Comparative Nonprofit Sector Project at Johns Hopkins University recently studied 37 nations and found total operating expenditures in 2002 of $1.6 trillion. The sector is dominated by charity schools and hospitals, which account for 57 percent of the expenditures, and includes everything from soup kitchens to professional associations, as well as the fast-growing budgets of aid-cum-activist NGOs, some of which now spend more than $1 billion a year.

The article points out that while total employment in the United States fell between 2001 and 2004, the number of jobs in the nonprofit sector grew by two percent to four percent a year.  With the increasing professionalization of the field, more and more MBAs are taking the reins and increasing numbers of charities are being run as businesses.

From inside the sector, I see all but the largest nonprofits struggling to make ends meet.  For years, those of us who work in the foundation field have heard nonprofit leaders lament the difficulty of fundraising, yet few of us have helped our grantees acquire or increase this capacity.  (Here’s a typical excuse: “That’s just part of the cost of doing business: deal with it.”)

We want to support nonprofit executive directors in their work, and yet how many times and in how many ways do they need to tell us that what keeps them up at night is worries about money?

Posted by Perla Ni

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Where’s the money?

Two weeks ago, I visited the northern coast of Aceh, Indonesia, curious to see not only how people are faring one year after the tsunami, but also how NGOs are spending the largest pool of humanitarian funds ever raised. On both counts, my report is the same: Not well.

After one day in Banda Aceh, I spent four more driving through the districts of Pidie and Bireun. Even the view from the highway bore witness to the ongoing suffering of the Acehnese. Where thriving marketplaces and traditional houses once stood, tent cities and government-built barracks spread. The skeletons of washed-up boats and cars still sit on the roads’ shoulders as far as two miles inland. Schools are boarded up. Fishing ponds bleed into each other and into the sea. Even in Banda Aceh, the province’s proud capital, 50% of the surviving population is still homeless. In rural villages, that number climbs to 70%.

When is more help coming? I didn’t know what to tell the village chiefs or the boat builders or my generous hosts in Pente Rheng, Kiran Baroh, Beurembang, and Pasi Lhok. Their stories resembled each other: A flurry of NGOs hurried through their villages soon after the tsunami, asking questions, staking claims, making promises. And then the NGOs never returned. Or the NGOs did return, but only to replace demolished houses, not to repair the badly damaged ones. I heard about one NGO that refused to rebuild any schools in one village unless it could rebuild the most prominent ones, near the highway. The village agreed, retracting its agreement with a smaller organization that made simpler promises. The NGO nailed its logo to the schools, and hasn’t been seen since. I heard about another NGO that decided not to build until it has the materials and expertise to meet the highest European standards of earthquake readiness.

The day I returned to Jakarta, an article the New York Times confirmed that many NGOs are indeed taking their time. In her article, “After Tsunami, a Rarity: Donated Dollars Remain,” Stephanie Strom reports that NGOs are resisting pressures to spend-down their windfall, and instead are contemplating how to “build back better” with long-term investments in education, health care, and economic recovery. She also writes that NGOs are spending unprecedented amounts of time and money documenting and justifying their spending to donors. Oxfam, for example, has already spent $1.5 million of its $278 million on monitoring and evaluating its own performance. Many other organizations are likewise providing detailed breakdowns of how and where their money is spent.

Meanwhile, it seemed to me that the Acehnese are stranded in a trough between the first wave of emergency aid and a second, promised wave of reconstruction funding. The tents in which many live were never intended to weather two monsoons, as their mold and holes attest. The camps are filthy with litter and the stink of raw sewage. Scabies is rampant. Without boats for fishing, yards for raising poultry, or ponds for farming seafood, the villagers must rely on the World Food Programme’s rations of rice and vegetable oil and sardines. But the rations are never quite enough. The children are skinnier, and not growing to be as tall as their older siblings. Health care is lacking for everyone because most of the medical teams left a few months after the tsunami.

There are no squeaky wheels here. People mourn their dead in the Acehnese way, bearing their hardships quietly. A man who lost his wife, parents, and three children smiled and said, “I’m just trying to forget the past on move on.” 

But NGOs have the grease, and plenty. Are they withholding immediate aid so that they can optimize their long-term planning and donor relationships? Whose needs are being addressed by this strategy? Whose standards are being met? Which sufferings are being forestalled, and which are being exacerbated? Could NGOs do a better job of addressing both immediate needs and long-term goals?

Alana Conner
Senior Editor
Stanford Social Innovation Review

Posted by Perla Ni

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