http://www.ssireview.org/articles/ Strategies, Tools, and Ideas for Nonprofits, Foundations, and Socially Responsible Businesses en walker_kelsey@gsb.stanford.edu Copyright 2008 2008-09-02T19:00:01-08:00 http://www.ssireview.org/articles/entry/whats_next_mba_students_venture_out/ http://www.ssireview.org/articles/entry/whats_next_mba_students_venture_out/ Nearly three years after Hurricane Katrina, one of New Orleans’ most impacted and impoverished neighborhoods, the Upper Ninth Ward, has seen its first glimmer of rebirth: Reflections of Beauty hair salon opened in July in a 1,000-square-foot refurbished dental office, thanks to 14 Stanford Graduate School of Business students. The students were part of IDEAcorps, a five-day program wherein graduate students from prestigious universities offer their wisdom to local entrepreneurs. In exchange, students get the sobering experience of turning theory into practice. The program was launched in 2007 after Tulane University entrepreneurship professor John Elstrott contacted the Idea Village, a nonprofit that focuses on igniting economic development in New Orleans, hoping to match students in his Rebuild New Orleans class with Idea Village clients. The experiment was a success, and the nonprofit next assigned three Tulane MBA students, one University of Pennsylvania graduate, and one Vanderbilt University undergraduate to give $100,000 (raised by the Idea Village) and technical help to 20 entrepreneurs trying to revitalize the city’s gutted tourism industry. In the next series of IDEAcorps programs, 18 University of Pennsylvania engineering students donated 40 refurbished computers to 35 New Orleans entrepreneurs and taught them computer skills; 15 Stanford business… Philanthropy & Responsible Investing 2008-09-02T18:00:00-08:00 http://www.ssireview.org/articles/entry/whats_next_the_giving_museum/ http://www.ssireview.org/articles/entry/whats_next_the_giving_museum/ New Yorkers expecting tony shops on the ground floor of Riverhouse, a new high-rise condominium with views of the Statue of Liberty, will instead find the Action Center to End World Hunger, a first-of-its-kind museum designed to teach children why world hunger exists and what they can do about it. The center, opening October 16, was created by global relief organization Mercy Corps after Battery Park City offered to rent the space for $1 per year for 60 years through its public amenity program and pledged $1.25 million in additional support. Other city organizations supporting the center—whose construction costs total some $5.4 million—include the Lower Manhattan Development Corporations ($1 million grant), the New York City Council ($250,000), and Mayor Michael Bloomberg’s office ($500,000). The center has also received funding from private sources. At the center’s information kiosks and displays, students, parents, and teachers can learn about climate change in Niger, Indonesia’s urban slums, the conflict in Afghanistan, and land rights in Guatamala, among other prssing issues. They an also choose to “take action” for one minute, one hour, one day, one month, or one lifetime; they then receive a menu of actions that includes signing a fair-trade petition, volunteering at… Philanthropy & Responsible Investing 2008-09-02T06:00:01-08:00 http://www.ssireview.org/articles/entry/money_to_grow_on/ http://www.ssireview.org/articles/entry/money_to_grow_on/ Over the past decade, the nonprofit sector has been increasingly abuzz with talk of strategic philanthropy, venture philanthropy, growth capital, and other forms of nonprofit investing. Among the Web sites of the 100 largest U.S. foundations, for example, 77 tout that they are involved in some type of “investment,” “leverage,” or “venture activity.” As entrepreneurs turn into philanthropists, they want to have the same outsized impact with their giving as they did with their business ventures. At the same time, institutional foundations want to leverage their dollars to do the most good. Although many nonprofit donors are talking about strategic investing, few are actually putting these ideas into practice. Most make grants that are too small to have a big impact. In 2005, for example, the 100 largest U.S. foundations made (usually multiyear) grants whose average was approximately $200,000. These same foundations’ assets, meanwhile, average some $2 billion.1 In addition, outside of gifts to universities, hospitals, and foundations, all U.S. individual donors and foundations made fewer than 150 grants of $5 million or more to the nonprofit sector in 2005. Only 25 of these went to human service organizations.2 By contrast, in 2005, U.S. venture capitalists alone made 3,100 investments… Nonprofit Management, Philanthropy & Responsible Investing 2008-09-02T06:00:00-08:00 http://www.ssireview.org/articles/entry/rediscovering_social_innovation/ http://www.ssireview.org/articles/entry/rediscovering_social_innovation/ In the spring of 2003, the Center for Social Innovation at the Stanford Graduate School of Business launched the Stanford Social Innovation Review. Our first “Editors’ Note” defined social innovation as “the process of inventing, securing support for, and implementing novel solutions to social needs and problems.” That same manifesto also described the publication’s unique approach to social innovation: “dissolving boundaries and brokering a dialogue between the public, private, and nonprofit sectors.” Over the last 20 years, we have seen an explosion in applications of business ideas and practices to nonprofit and government works. 1 We have also watched businesses take up the cause of creating social value under the mantle of corporate social responsibility, corporate citizenship, and socially responsible business. Indicative of growing cross-sector exchanges, we have witnessed the proliferation of terms that juxtapose the word “social” with private sector concepts, producing such new terms as social entrepreneurship, social enterprise, and of course our favorite, social innovation. We contend that social innovation is the best construct for understanding—and producing—lasting social change. In order to gain more precision and insight, we redefine social innovation to mean: A novel solution to a social problem that is more effective, efficient, sustainable, or… Social Entrepreneurship, Corporate Social Responsiblity, Philanthropy & Responsible Investing 2008-09-02T06:00:00-08:00 http://www.ssireview.org/articles/entry/weve_arrived_now_what/ http://www.ssireview.org/articles/entry/weve_arrived_now_what/ When I interviewed for my current position at Schwab Charitable in 1999, the nonprofit was still a start-up and just launching a “donor-advised fund” giving program. Though I had been active in the charitable sector for 15 years, I was not yet familiar with donor-advised funds. Although the Cleveland Foundation pioneered the donor-advised fund concept in 1914 and New York Community Trust formalized a donoradvised fund program in 1931, it was the launch of several national donoradvised funds by financial services companies in the 1990s that made them accessible and affordable to tens of thousands of Americans. Judging by their explosive growth, donoradvised funds have clearly met a need. In 2006, the nation’s 99 largest funds had more than $19.2 billion in assets and donated more than $3.5 billion annually to charity. Briefly, donor-advised funds are charitable giving accounts offered by a sponsoring charity that are designed as a more accessible, simpler, and less expensive alternative to private foundations. Donors contribute taxdeductible assets to their accounts, advise the sponsoring charity on how it should invest the assets so that they grow before they are granted, and recommend grants from their accounts to charitable organizations of their choice over time. The… Philanthropy & Responsible Investing 2008-08-24T14:00:00-08:00 http://www.ssireview.org/articles/entry/the_equity_capital_gap/ http://www.ssireview.org/articles/entry/the_equity_capital_gap/ Imagine for a moment that our 21st-century economy were transported back to the 15th century. Businesses, by and large, would be tiny by today’s standards. Most revenue would be in the form of unwieldy barter rather than standardized currency, and profits would be thin or nonexistent, making it difficult to invest in new technologies or fund growth. Guild elders, the king, and other oligarchs, not consumers or the market, would have sway over the entrepreneur and the success of his business. And equity capital, used today to fund the growth of risky start-ups, promising midsize businesses, and large multinationals, would be unavailable. Does this scenario seem difficult to imagine in today’s world? Not if you’re an entrepreneur or manager working in the 21st-century nonprofit sector, where some of society’s most daunting challenges are routinely taken on with commercial tools and techniques that could have figured prominently in the 1394 poem Pierce the Ploughman’s Crede. Although the social, political, and economic environments have changed enormously in the intervening centuries, and entrepreneurial ideas, techniques, and resourcefulness are now common among nonprofits, antiquated commercial habits still dominate the nonprofit sector and undermine its progress. First among these hindrances is this: Nonprofit enterprises suffer… Nonprofit Management, Philanthropy & Responsible Investing 2008-06-29T14:00:00-08:00 http://www.ssireview.org/articles/entry/taking_stock_of_venture_philanthropy/ http://www.ssireview.org/articles/entry/taking_stock_of_venture_philanthropy/ In 2000, the San Mateo County library system piloted a program called Raising A Reader in 12 Northern California child care centers. The program taught low-income parents a daily routine of cuddling and reading to their young children. With its low-cost method for preparing children for kindergarten, Raising A Reader expanded to 175 communities across 33 states by 2008. Sixteen independent evaluations showed that the program fostered parent-child bonding and children’s cognitive development, and Fast Company awarded the organization its Social Capitalist Award three times. Behind Raising A Reader’s success and rapid expansion was the Center for Venture Philanthropy, a division of the Peninsula Community Foundation (now the Silicon Valley Community Foundation). One of the pioneers of venture philanthropy, the Center for Venture Philanthropy applied venture capital’s tools for incubating new businesses to social change organizations. The center has launched five social venture funds since its inception. For each fund, the community foundation taps into its vast network of local investors to raise money. Investors, in turn, work directly with the center staff and nonprofit clients to understand and address community and nonprofit issues. To fund and expand Raising A Reader, the center first worked with the organization’s leaders to… Education, Nonprofit Management, Philanthropy & Responsible Investing 2008-06-22T14:00:00-08:00 http://www.ssireview.org/articles/entry/reimagining_microfinance/ http://www.ssireview.org/articles/entry/reimagining_microfinance/ Despite the fact that most microfinance institutions (MFIs) were established to reduce poverty, many are starting to look like traditional financial institutions. To expand their outreach and loan portfolios, they tap into commercial and quasi-commercial sources of finance, which require them to demonstrate consistent profitability to their investors. When the Mexican MFI Banco Compartamos went public in 2007, for example, its existing shareholders earned returns of approximately 100 percent compounded annually over an eight-year period. This trend toward commercialization has led critics to ask whether MFIs will continue to serve the world’s poorest people. They point out that many profit-minded MFIs have either raised their interest rates or failed to lower them when reductions in costs allowed them to do so. They note that some MFIs have cut back on social service programs, infrastructure, and staff training to reduce costs and increase short-term profitability. They show that a growing number of MFIs are not tracking their social impact even though they have the tools to do so. At the same time, other critics worry that MFIs are not commercial enough. They say that MFIs’ commitment to social justice keeps these organizations from becoming profitable. Lack of profitability in turn prevents… Economic Development, Social Entrepreneurship, Philanthropy & Responsible Investing 2008-06-08T14:00:00-08:00 http://www.ssireview.org/articles/entry/c_level_diversity/ http://www.ssireview.org/articles/entry/c_level_diversity/ Last September, on the 50th anniversary of the landmark desegregation of Little Rock Central High School, Americans acknowledged how the Little Rock Nine (as the first group of black students came to be called) prompted dramatic changes that would create new opportunities for minorities in the coming decades. Indeed, the face of America has changed dramatically in the last 50 years. Consider the demographics of Houston, for instance, our nation’s fourth largest metropolitan area. Although 55 percent of Houstonians age 50 and older are white, 77 percent of young adults ages 18 to 30 are minority. And demographics are shifting similarly across the United States—except in corporate America’s executive offices, that is. Despite composing 28 percent of the overall U.S. population, African Americans, Hispanics, and Native Americans represent only 14 percent of graduates from leading undergraduate colleges and universities. What’s more, these minorities fill only 6 percent to 7 percent of the fast-track entry-level jobs post-college, 8 percent of the major MBA programs, and 3 percent of senior executive positions at major corporations. Why the Problem Exists Students of color have always prioritized going to college, despite the many obstacles along their path. Still, only 45 percent of minority college… Education, Corporate Social Responsiblity, Philanthropy & Responsible Investing 2008-05-29T14:00:01-08:00 http://www.ssireview.org/articles/entry/review_creating_a_world_without_poverty/ http://www.ssireview.org/articles/entry/review_creating_a_world_without_poverty/ CREATING A WORLD WITHOUT POVERTY: Social Business and the Future of Capitalism Muhammad Yunus 288 pages (PublicAffairs, 2008) The title of Muhammad Yunus’ new book, Creating a World Without Poverty, gives a sense of his vision’s sweep, but only hints at his ambition. He wants not only to end global poverty and related problems such as gender discrimination, social exclusion, and lack of access to health care and education, but also to eliminate environmental degradation and extreme inequality. In short, Yunus wants to create a more just society for all. Yunus presents his ideas for solving the world’s social problems as he outlines how Bangladesh can develop more successfully; updates the history of the Grameen Bank, for which most readers will know him; offers his thoughts on the potential of technology to help end poverty; and details his ideas on international norms and governance. But his main tool for alleviating the world’s ills is social business, which he defines as financially sustainable but non-dividend- paying enterprises established to solve social and environmental problems. These enterprises are controlled by shareholders (either donors or the poor), and donors get their initial investment back, though any additional profits created by the enterprise are… Economic Development, Social Entrepreneurship, Philanthropy & Responsible Investing 2008-05-29T14:00:01-08:00