A Call to Innovate: Earned Income

Ben & Jerry give you a good reason to get fat: Social Enterprise / Partnershops

I previously penned the (subtly titled) article, “Hey, Nonprofits! Wake up! You can innovate or you can die.”

The piece included 20 questions that I’ll be exploring in more detail under the heading “A Call to Innovate.”

Here is the first question: Can you offset some of your philanthropic dollars with earned income?

Social enterprise. Social ventures. Earned income. Call them what you will, these efforts are an important part of the future of nonprofits.

That’s what everyone’s been saying for years.

But aren’t they also an important part of the history of nonprofits?

A few examples:

v      Thrift stores (i.e. Goodwill)

v      Museum gift stores

v      Gymnasiums (i.e. YMCA)

v      Rental facilities (i.e. Boy Scouts campgrounds)

v      Packaging/Assembly services (i.e. work-service sites for people with intellectual disabilities)

Many of these ventures are as close to the core mission of these organizations as any other part of their work. But over the past couple of years, we have seen the emergence of ventures that were more directly aimed at generating profits and less and impacting mission.

For example, a youth development organization owning a Ben & Jerry’s Scoop Shop. A pet shelter owning a consignment shop. A theater troupe operating a hair salon (I mean, that could happen, right?).

What is the ideal blend of “margin and mission”? When can innovation lead towards mission creep in the name of profits?

Here is an approach that I recommend adopting when considering what earned income activities to pursue:

1. Create an “asset map” that charts all of the areas of expertise that are a part of your organization, as well as the tangible assets that you own (i.e. real estate)
2. Build a “relationship map” that documents all of the connections that you have in the community that could be naturally/easily leveraged into a business relationship (i.e. your natural customers)
3. Cross the two of these maps to see which of your assets are currently being purchased by your relationships
4. Explore the opportunities that present themselves through this process, and determine if there are any that naturally jump out; if so, attempt to calculate the possible value of a venture aimed at monetizing that relationship.
5. Similarly, document all of the additional needs within your relationship map. See if there are any untapped opportunities to capitalize on multiple relationships at once (i.e. if you have a relationship with several dozen churches, a floral business might be a good venture to explore… particularly if you are The Arboretum)
6. Analyze the “highest yield” opportunities that emerge from this process to determine the 3 – 4 that make the most sense for your nonprofit.

The last of these if going to be different for each organization.

For some, the one that makes the most sense will be the most profitable. For others, the most mission-related. For others, a hybrid.

What formula do you think applies to your organization? 

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Can government funding kill nonprofit innovation?

This little light of mine, (the Edward M. Kennedy Serve America Act) gonna let it shine...

Writing in The Wall Street Journal, Howard Husock -- the Manhattan Institute's Vice President, Policy Research and the Director of that organization's Social Entrepreneurship Initiative -- recently wrote:

"This week, the president signed into law the Edward M. Kennedy Serve America Act, which authorizes a huge expansion of the Americorps program, potentially tripling the number of its government-paid "volunteers." The legislation -- which also promises federal funds for "effective solutions developed by social entrepreneurs" -- was heralded as a victory for patriotism and public service...But is it truly good news? Those who cherish the independence of American philanthropy and the nonprofits it supports actually have reason for worry."

He then goes on to conclude::

"Sadly, social entrepreneurs -- who have often started organizations to help us cope with the failure of government programs -- may well be tempted by the big money. But that won't be the best way to serve America."

The crux of his argument is this:

"The Kennedy Act threatens to thwart this creative movement. It will throw so much money at nascent programs that these otherwise independent efforts will lurch after federal dollars and bend toward government directives."

Frankly, I find this idea a bit preposterous. In what other sector would an infusion of capital serve as a barrier to innovation? Yes, there might be some waste -- look at the money that was squandered on funding ridiculous start-ups during the Internet boom of the 90s. However, didn't the flood of angel investors throwing money into dot-coms result in some remarkable breakthroughs in innovation?

Similarly, don't both political parties agree that the government's investment in green technology will drive innovation in the energy economy? Why are we not concerned about the way that these funds will make scientists "bend toward government directives"?

Why is it that we think that nonprofits would not similarly respond with creativity and innovation to this sudden influx of both financial and human capital?

Yes, there will be waste and "money chsing"... just as in any other sector. Let us remember that nonprofits might be charitable in purpose, but they are still businesses: no margin, no mission.

I do not see the Edward M. Kennedy Serve America Act inhibiting innovation. Rather, I think it has the potential to spark an amazing new wave of volunteerism and engaged philanthropy that might not otherwise exist.

What do you think?

Read the article here:
Eating From the Hand That Bites You - WSJ.com

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Become A Part of Something Big

My friend Charles Senteio recently forwarded me an announcement from Richard G. Averitt, Co-Founder and CEO of "A Part of Something Big." The company calls itself "a unique and exclusive collection of earth friendly, fair trade, micro-financed and social development goods, that represent a major breakthrough for school and non-profit fundraising."

Before addressing the fundraising possibilities, I found the items on the store intriguing enough to post this blog. If you're a fan of green commerce, this site is worth a visit:
http://www.partofsomethingbig.com/shop.jsp

Here is their announcement:

A Part of Something Big is thrilled to announce we are now offer 40% to all schools and non-profits beginning August 2009!
With our unique and exclusive collection of earth friendly, fair trade, micro-finance and social development goods, this is a major breakthrough for school and non-profit fundraising. Starting in August, every school and non-profit will earn 40% return when executing their fundraiser with an online campaign and 25% on all year round purchases.

Sign your school up now to take advantage of this outstanding opportunity to make a difference for your school and make a difference for our world!
More info here:
http://www.partofsomethingbig.com/

You can also reply to this email or call us at 888-807-5559 if you have questions.
We look forward to you joining our community of parents committed to making our fundraising something to be proud of.

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Non-Nonprofit Blog

I will be the first to say that the last thing that we need in this world is another blog.

But here's an idea for one that I hope someone starts:

Non-Nonprofit Blog
Where margins feed missions

I did not come up with this idea, of course. I credit Robert Egger with V3 Campaign with being the most vocal advocate for the idea that "nonprofit is a tax status. We are businesses."

Why do we define ourselves by what we are not (i.e. "not-for-profit")? Is simply not making money our goal, or are we here to achieve something?

Incidentally, www.nonnonprofit.com and .org is currently available.

We need more conversation about the financing model that we use as "non-profits." We need to consider ways to change our vocabulary so that we think of ourselves as social enterprises . . . or, as I am tending to say, mission-based organizations.

WHAT DO YOU THINK?

What should we call ourselves?

• Nonprofits?
• Social Enterprises?
• Mission-based organizations?
• Care-based organizations (thanks to George Ellis and the Dallas Social Venture Partners for this one)?
• Community-based organizations?
• Non-governmental organizations (NGOs)?
• Charities?
• Philanthropies?
• Pinko commies?
• Loony bins?

Boldly making profits like no non-profit has made before....

Thanks to my friend Charles Senteio for pointing out this piece in The Economist:

Walk this way? Not so fast...

Profit in the non-profit sector | How to be bold

BETWEEN 1994 and 2002, more than $300m was raised in America for dozens of AIDS and breast-cancer charities at bike rides and walks organised by a profit-making fund-raising outfit called Pallotta TeamWorks. Then, in August 2002, after many of the charities decided to bite the hand that fed them, the Los Angeles-based organisation was forced to close, sacking its 350 employees. The final straw had been the decision by Avon Products Foundation to launch its own version of a three-day breast-cancer walk developed by Pallotta, which it fired.

The charities had become angry after a number of newspapers complained that the firm was too costly, charging expenses that typically exceeded the 35 cents per dollar raised recommended by various charitable watchdogs. They also complained that Pallotta was a for-profit company, and that its founder, Dan Pallotta, paid himself a salary well above the norm.

As Mr Pallotta points out in his riposte, “Uncharitable”, firing his firm may have got the expense ratio down, but it did the charities no good. After Avon started its own three-day walks, the most it managed to raise was $22.7m after expenses; the last walk organised by Pallotta TeamWorks, after costs, had provided Avon with $70.9m to make grants. The other charities that dispensed with Mr Pallotta’s services suffered similar falls and some had to lay off staff.

Mr Pallotta’s anger at his treatment has prompted a big idea: the charitable sector should embrace capitalism, and not just by borrowing business methods from the corporate world, but by actively seeking to make a profit by doing good. Why is most charity hopelessly ineffective, he asks? Because it is run according to an ideology that ensures it will fail: charities are starved of the money, techniques and talents they need to succeed—things that are taken for granted in the business world.

Mr Pallotta blames the Puritans who founded America, especially John Winthrop, who set out in his famous “city on a hill” sermon that the “Modell of Christian Charity” requires the poor to be given handouts rather than helped to escape from their poverty. “Charity”, argues Mr Pallotta, “is no longer an exchange between the non-needy and the needy. It is an exchange between the non-needy (donors) and the non-needy (the charity work force) to provide services to the needy. It is an exchange between equals to help the needy.” Why is society happy that carmakers make a profit, pay competitive salaries and advertise their goods, yet it is outraged when charities do the same?

Mr Pallotta produces quite a lot of both data and logic. If you do not first analyse a fund-raiser’s results, how is it possible to judge whether what it spent was justified? He also makes a convincing case for charities to spend far more on advertising, perhaps even selling shares to pay for it. If this makes you queasy, read Mr Pallotta’s book. As he says, “To mount a campaign to convert 6 billion people to love—which is essentially the role of charity—takes a lot of money…Raise the capital to promote the idea by offering a return on investment, hire the best people to manage the effort, and run the advertising to spread the word. You beat capitalism at its own game.”

See the article here:
http://www.economist.com/books/displaystory.cfm?story_id=12970810

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Amazing resource for youth-serving organizations

I am incredibly impressed by the work of the Dallas Children's Advocacy Center. There are few organizations that I could imagine making a bigger impact on the lives of our community's most vulnerable citizens!

In addition to providing great service themselves, the DCAC has now launched an incredible Web site to offer its trainings to the rest of us! It breaks my heart that we need something like this in our world, but I am grateful that they are providing it.

If you work for a youth-serving organization, you definitely need to check this out:
Crimes Against Children Conference-on-Demand
https://www.cacconference.org/Conference_Capture.html

Many thanks to DCAC for this incredible resource... which is also a remarkable example of social enterprise!

Want to launch an Earned Revenue Venture?

Do you have an idea to expand the revenue for your organization?

Are you currently operating a business venture to earn income and help your organization achieve its mission?

Could you benefit from intensive technical assistance to achieve your earned income goals?

Join us to learn more about the North Texas Community Wealth Collaborative at an Information Session

Fort Worth:
Wednesday, November 5, 1:30 - 3:30 p.m.
Ft. Worth Botanic Garden
Redbud Hall
3220 Botanic Garden Blvd
Ft. Worth

Dallas:
Thursday, November 6, 9:00 - 11:00 a.m.
Center for Community Cooperation,
Oak Corner Room,
2900 Live Oak,
Dallas

Registration Deadline:
Friday, Oct. 31

The North Texas Community Wealth Collaborative is an exciting 11-month project focused on assisting nonprofit organizations in development and growing earned income ventures. These information sessions, facilitated by Community Wealth Ventures and the Center for Nonprofit Management, will provide an opportunity to learn more about the Collaborative, how to apply, and what to expect from participation in the project. We suggest that the executive director, a board member and another member of the senior staff attend the session.Six to eight nonprofit organizations will be selected from the applicant pool to participate in the Collaborative. It is designed for nonprofits that are currently running an earned income venture or have demonstrated a commitment to launching one. Collaborative participants will receive intensive business planning and venture development assistance, which will result in a focused business plan to guide the growth of the venture.

Register now!

Registration Deadline:
Friday, Oct. 31

Space is limited, so please RSVP early to reserve a spot.

Click here for more information about the program or contact Charlotte Keany at Keany@cnmdallas.org (214-826-3470, ext. 244) or Diana Peacock at dpeacock@communitywealth.com (202-478-6578).

North Texas Community Wealth Collaborative Partners:
Community Wealth Ventures, Inc.
Center for Nonprofit Management

Funding Partners:
Meadows Foundation
Amon G. Carter Foundation
Harold Simmons Foundation
Citigroup Foundation
Several anonymous funders

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Funding for nonprofits is changing

Thanks to the Dallas Business Journal: for citing The Center For Nonprofit Managment's work in this article (fully posted below in case you do not have a login for their site):

Funding for nonprofits is changing (link)
Dallas Business Journal - by Joyce Tsai Staff writer
http://www.bizjournals.com/dallas/stories/2008/10/13/story3.html

New Approach: Molly Bogen of The Senior Source said her nonprofit is starting a for-profit venture, Platinum Care Solutions, to provide geriatric care management as a way to boost revenue to support her nonprofit mission to help the elderly.

More and more North Texas nonprofits are creating their own for-profit subsidiaries as a way to insulate themselves from the ups and downs of traditional fundraising efforts. The trend is likely to become even more common as nonprofits, like other businesses, try to survive in an increasingly volatile economy.
Historically, nonprofits have relied on a hodgepodge of government and foundation grants as well as individual and corporate contributions to help them provide their services.

But many nonprofits, which receive tax advantages in return for their nonprofit status, are providing goods or services that increasingly can compete with for-profit entities — and the number of nonprofits is increasing faster than the funds to support them. As a result, nonprofits have seen the revenue tied to their for-profit subsidiaries grow more than 200% in the past two decades, and such dollars now account for more than 57% of nonprofits’ $251 billion annual revenue stream, according to the Social Enterprise Alliance in Washington, D.C.

There are currently more than 14,000 nonprofits in North Texas, according to Diana Peacock, a senior consultant for Community Wealth Ventures. One of those is Dallas-based The Senior Source, which has provided a range of services to seniors for the past 45 years.

It is on the cusp of launching a for-profit venture called Platinum Care Solutions, designed to provide geriatric care management to seniors, including professional assessment, written care plans, coordination of medical appointments, home health, transportation, and evaluations of nursing homes, assisted-living facilities and retirement communities, said Executive Director Molly H. Bogen.

It is a natural extension of what the agency has offered in some form since 1994 through its Elder Support program, which currently serves about 5,000 clients. The program offers financial services and case work consultations to caregivers and the elderly at little or no cost.

The nonprofit hopes to compete with the independent players in a fairly fragmented field of about 15 geriatric care managers in the Metroplex and has drawn a detailed business plan that calls for an initial capital investment of $275,000 to start the venture. The Senior Source hopes to add a new geriatric care manager position — to the two staff members it currently has — every year for the first five years once it launches Platinum Care Solutions.

By targeting baby boomers and older adults with incomes of more than $100,000, a demographic that is expected to surge in the future, the nonprofit is placing its faith in its business plan to boost funding for the nonprofit, which currently has a $3.5 million annual budget. It expects to generate sales of more than $910,000 and a profit of about $290,000, by year five, Bogen said.

It’s a way for the nonprofit to become more self-sustaining, Bogan said. About 43% of its annual funding comes from government grants, which have stayed stagnant. And government funding certainly isn’t assured even when the country is not dealing with a financial crisis, Bogen acknowledged.

Also, donations from individuals, corporations and foundations, which make up another 22% of the nonprofit’s funding, are “discretionary money” that can disappear or dwindle depending on the ups and downs of the economy.

Every dollar earned by the for-profit Platinum Care Solutions will pay to provide services to the elderly who cannot pay, she said, and help expand its mission of helping seniors.

Local guidance
As for-profit business ventures for nonprofits have grown, so have the concerns of their for-profit competitors.

For-profits can sometimes resent the encroachment of nonprofits into their market, Peacock said. One classic case involved the lawsuit filed against the YMCA by gyms who complained that the YMCA had an unfair advantage. (The YMCA eventually won.)

And as more nonprofits are seeing a need to understand the pitfalls of starting these kind of ventures, the tools and instruction for nonprofits in North Texas has grown.

The Senior Source sought the advice and training of the Dallas-based Center for Nonprofit Management, which has this year started to offer a 10-month business planning program to area nonprofits in conjunction with the Washington D.C.-based Community Wealth Ventures Inc., a social enterprise consulting firm. The cost of the program to the agencies is $5,000.

Diana Peacock, a senior consultant for Community Wealth Ventures, said nonprofits are increasingly looking at fee-for-service activities, whereas many years ago “they felt like they would need to be providing those services for free.”

To see examples of nonprofits creating for-profit subsidiaries, one doesn’t have to look far.

Consider Goodwill Industries International with its thrift stores, YMCA with its health and fitness centers, and Girl Scouts of America with its cookies.

But the efforts of smaller, lower-profile nonprofits to undertake these efforts have gained momentum in the past few years, Peacock said. Also, there’s more diversity in the range of business services and goods they will offer.

In North Texas, for instance, the Catholic Charities Dioceses of Fort Worth Inc. is planning to expand its translation and interpretation services into a for-profit enterprise. It will draw upon the diverse immigrant population it serves, train them as translators and serve as a job placement service to provide those much-needed services at hospitals, public safety departments and the courts.

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A "Boone" for Philanthropy?

Will T. Boone Pickens save the world?

The current edition of Texas Monthly features a fascinating article about legendary oilman-turned-wind-farmer, T. Boone Pickens.

The piece, entitled "There Will Be Boone," details some of the Pickens Plan and the way that it is poised to make a serious change in our economy.

Pickens is also the mastermind of a charitable bonanza for his alma mater, OSU (which I blogged about here).

If the Pickes Plans works out and we manages to shift even a small portion of our energy usage over to alternative power, the returns for our community -- in the form of cost savings, new jobs created, better environment, etc. -- could be just as high as the financial returns to Mr. Pickens himself.

Forget social enterprise: this is a form of doing well by doing good that might never be surpassed.

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Sojourners Launces online Store (SojoStore)

Jim Wallis and the good folks at Sojourners: Christians for Justice and Peace recently launched an online store with this message:

"Check out Sojourners' new online store for social justice resources for you, your study group, or your friends. SojoStore features study guides, worship materials, books, magazines, stickers, t-shirts and more.

"What's best about shopping at SojoStore? Your purchase from SojoStore will go directly toward supporting Sojourners' work for peace and justice."

Visit the store here:
http://store.sojo.net/

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Good Capital / Social Capital Index

The latest eNewsletter from Good Capital reports:

Two months ago the Good Capitalist released the first edition of the Social Capital Index, a timely tracking of investments in the social capital market. Through the DealSpace feature, the Index tracks capital movements in social enterprise (health, education, and workforce development), fair trade, digital inclusion, and some clean tech and microfinance investments. This month the SoCap Index returns with a new feature: Deals in Play.

The DealSpace section of the Index lists investments already made, while Deals in Play presents investments waiting to happen. The companies and funds listed in Deals in Play are actively seeking capital to either get their enterprise off the ground or expand an already proven business model. Through an initial screen, Good Capital has identified these companies as promising social enterprises. Good Capital has not conducted due diligence on the entities listed and makes no claims about their viability, but it presents them here in an effort to make it easier for worthy enterprises and investors to find each other. As with the rest of the Social Capital Index that tracks funds and companies that have received money, Deals in Play will eventually be incorporated into a searchable online database.

Learn more here:
http://www.xigi.net/

or

http://www.goodcap.net/

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Achieving Impact and Sustainability through Market Based Approaches

I received this important notice from Community Wealth Ventures, and wanted to share:

Achieving Impact and Sustainability through Market Based Approaches

Discussion Highlights

On October 27, 2007 Community Wealth Ventures gathered together 40 philanthropic leaders for a day-long summit in Washington, D.C. with the goal of exploring how to make use of market strategies to fulfill the missions of nonprofit organizations. Our intent was to provide a forum for discussion and sharing about the successes, challenges, and lessons learned by nonprofits and grantmakers that have pioneered market-based approaches to social change.

This report is a summary adaptation of the presentations and discussions of the day.

Click here to download read the report (PDF).


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What do you think? Please click the COMMENTS button below.

The Sins of Philanthrocapitalism?

Thanks to Sean Stannard-Stockton for continuing the conversation with me over at Tactical Philanthropy. His latest article, George Overholser Responds: Sustainable Nonprofits, includes an interesting discussion of the role of earned vs. non-earned income.

I would encourage you to get involved in the conversation, particularly at the point where it drops off... (Builders vs. Buyers).

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What do you think? Please click the COMMENTS button below.

If you had Google's ear.... would you whisper or scream?

Over at Tactical Philanthropy, Sean Stannard-Stockton has taken a very difficult task onto his shoulders by asking the question:

What to Measure and Why in Philanthropy?

(Continued thanks to Phil Cubeta for pointing us to interesting things like this... does the man ever blink, let alone sleep?)

Sean's question comes as he works to prepare for a "meeting with someone from Google.org next week to talk about what kind of information I think they should make available about nonprofits in Google Finance and other ways that Google.com’s mission statement to “organizing the world’s information” can be directed at the Third Sector."

Here are my thoughts...

As we approach the elections, I am reminded of a similar question: What makes a good country?

Is it simply GDP growth? % of electorate who participate in elections? Average income? Average lifespan?

I think it can be very difficult to gauge a good non-profit organization. In fact, I think that we have a problem with the way that we gauge all organizations.

The over-reliance on financial measures for evaluating a for-profit company is a problem, as well. I am in the minority with this idea, but I do not believe that the purpose of a company is to make money. I believe that it is to provide a needed service or product to the community.

This is the case for non-profit and for-profit companies. Their distinction should be limited to tax designation.

Is it a profitable company a good company if it causes social ills? Is a company that provides social benefits a bad company if it operates at a deficit?

These are the larger questions that we must ask ourselves.

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What do you think? Please click the COMMENTS button below.

Great News for Non-Profits, from Google... but some Caveats

For the past few days, I've wanted to blog about the most recent news from Google, which is now offering free checkout services to non-profits (i.e. 100% of donations come to your organization) as well as an expanded YouTube for non-profits, including a non-profit. But as I gathered my thoughts, I came across this blog that does a fine job at explaining the upsides and potential risks of using these two new "boons" for the charitable sector:

Katya's Non-Profit Marketing Blog: "Tips for Google Checkout, YouTube freebies"

I am very thankful that Google is leading this charge towards a sensible for-profit/non-profit collaboration that enhances both entities' work. I have wanted this for some time, as I blogged about it here on February 18, 2007:

The Raiser's Razor: Open Letter to Venture Philanthropists

Thank you, Katya, for your excellent work.

DISCUSSION: Is this development a good thing for non-profits? Are you going to use these tools to help your non-profit?

Echoing Green: Funding the Future of Social Enterprise

I recently found out about this amazing organization, which is providing seed capital to some of the world's most exciting ideas for social enterprise. Their fellowship is designed around their unique and powerful theory of social change. The next round of applications begins later this month ... I hope that you will consider an application.

---

Echoing Green

Echoing Green provides first-stage funding and support to visionary leaders with bold ideas for social change. As an angel investor in the social sector, Echoing Green identifies, funds, and supports the world’s most exceptional emerging leaders and the organizations they launch. Through a two-year fellowship program, we help passionate social entrepreneurs develop new solutions to some of society’s most difficult problems. These social entrepreneurs and their organizations work to address deeply-rooted social, economic, and political inequities to ensure equal access and help all individuals reach their potential.

WHAT WE BELIEVE
• Social entrepreneurs play a vital role in driving social change.
• Social change is created by developing new approaches that address the root causes of social problems.
• The next big idea will come from a robust pipeline of new leaders with innovative solutions.
• New organizations, unconstrained by tradition, are best able to challenge the status quo.

HOW WE MAKE A DIFFERENCE
• Identify Visionaries: Through a highly competitive selection process, Echoing Green identifies talented yet unproven social entrepreneurs who are dedicated to addressing the root causes of social problems.
• Invest in Innovation: Each year, we invest approximately $1 million to help Echoing Green Fellows transform innovative ideas into action. By applying entrepreneurial principles to social sector investment, we help launch cutting-edge organizations that transform communities.
• Provide Hands-on Support: We provide technical assistance and consulting to help new leaders build organizations, increase their organization’s capacity, and manage growth. We also facilitate peer-to-peer learning to enhance leadership skills and ensure organizational sustainability.
• Connect People: We harness the experience and expertise of our global network of social entrepreneurs to share best practices and ensure success.

INVESTMENT STRATEGY
The entrepreneurial spirit has driven the U.S. economy throughout its history. We believe that the same energy and creativity can foster new solutions in the social sector. That is why Echoing Green takes risks on undiscovered leaders when others won’t. Less than two percent of all foundation support is available for seed funding, making Echoing Green a leading global social venture fund that invests in new organizations at their earliest stages.

SOCIAL RETURN
Echoing Green has a proven track record of delivering a social return on investment. Since 1987, we have invested $25 million to help nearly 450 visionary leaders spark positive change in forty countries. We have helped launch model organizations working in education, youth development, health care, housing, environmental justice, human and civil rights, economic and social justice, the arts, and immigration. Since inception, fellows’ organizations have raised more than $930 million in additional funding, delivering a return on investment (ROI) of approximately forty-four times Echoing Green’s seed funding. Approximately two out of three organizations launched by Echoing Green Fellows are still thriving, and 85 percent of Echoing Green Fellows stay in leadership positions in the social sector.

WHY IT MATTERS
Intractable social problems must be approached in new ways if we ever hope to solve them. By funding new leaders who are willing to challenge the status quo, we promote new ideas and new solutions at the vanguard of social change. From working to stop the spread of HIV/AIDs among Nigerian youth to exonerating wrongly condemned

Raising Venture Capital for Philanthropy

I previously wrote about Homeward Bound's IPO -- not an Initial Public Offering, as it is known in the corporate world, but an "Immediate Public Opportunity ... to end homelessness." Up to 200,000 "fundraising shares" have been made available at $32 each.

The first share was famously purchased by Warren Buffet.

They are calling this the "first-ever charity IPO" . . . but this actually builds on efforts previously launched at other organizations, such as College Summit. For example, see this April 2006 story in Fast Company about a "private placement" that raised $15 million from 10 investors to support the organization's growth:

Next: A Nonprofit IPO?

Locally, you can read about the efforts of George Ellis in a recent Philanthropy World Magazine. Ellis helped "introduce venture philanthropy to Dallas." He has been critical in the growth and expansion of the Entrepreneurs Foundation of North Texas, led by one of the strongest Executive Directors in our community (Pam Gerber). Ellis and Gerber are working to help companies "do well by doing good," and their perspective on philanthropy builds directly on the work of the venure capital markets.

In fact, you can hear an interview with Pam Gerber here:

Philanthropy World on MN1 [feeds.mn1.com]

At CDM, we've been discussing how to apply these principles to our work. We've made a great deal of progress over the past year, thanks in great part to the work of Karen Waller, Teresa Hiser and our friends at the Dini Partners (who have been advising us on the development of our ongoing capital campaign).

These concepts are not new for such campaigns. However, we are now thinking beyond the simple construction of the building, and to the significantly expanded operations that we will inherit once the buildings are complete. We find ourselves asking:

• How can we possibly ramp up our revenues by 50% over the coming years simply to handle these expansions? (not including the other organic growth that will occur in our other programs)
  
• We do not currently have an endowment -- is there a role for such a funding vehicle within our organization? How could we build it, while the demand for funds is so tight and the organization continues to grow at 25%+ per year?
  
• Instead of an endowment, is there a way to amass a large amount of "working capital" that we can use to fund our existing operations while refocusing our fundraising energies on the capital campaign?
  
• How much will our social enterprise program be able to contribute through its resale operations and car auction program? Will these efforts even be generating a positive cash flow by the time these expansions arrive?
  
• What do our donors -- particularly donors to our capital campaign -- expect of us in terms of expanding our annual fundraising? Are their own commitments going to grow along with their expectations, or are they simply wanting us to find new sources of support?
  
• How can we move beyond the day-to-day, keep-the-lights-on mentality towards a longer-term, strategic perspective on fundraising?
  
• What would a donor need in order to consider a sacrificial, major gift to be used in an unrestricted way to expand our work?
  
• Is there a way to build a case for significant, multi-year commitments from donors?

We are not sure if this is venture philanthropy or simply effective fundraising. Whatever we call it, we understand that our current practices must change and we must adapt to the changing needs of our high-impact investors.

Super-sized Philanthropy? Brilliant Social Enterprise? Or just good business?

I found it strangely appropriate that the head of Google's Philanthropic arm is named "Dr. Brilliant":
Official Google Blog: Google.org's new director

Google.org is an interesting creation -- its goals would generally be considered charitable in nature, but it was established as a for-profit corporation. More about this can be found here:

Philanthropy Google’s Way: Not the Usual - New York Times

Google.org now has an official blog that's worth paying attention to:
http://blog.google.org/

It will be very interesting to see where this organization goes, and how it will shape philanthropy over the coming years.

There is also an interesting article on Dr. Brilliant here...written in a style reminiscent of Phil Cubeta's Gift Hub:
Dr. Brilliant Vs. the Devil of Ambition:

If baby boomers had their own Faust, he'd be Larry Brilliant, a man who's found himself at the center of almost every defining moment of his generation. His biggest battle: taming the devil of ambition.

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On a slightly unrelated note... it's interesting that the "sixth-largest charity in the nation today, according to the Chronicle of Philanthropy, is in fact Fidelity's Charitable Gift Fund, which last year sucked in a record $1.3 billion, a 23% increase over 2005, and paid out $1 billion in grants to good causes":

The Gathering's "Charity Made Efficient" article describes how this growth has been driven by allowing Fidelity's clients the ability "with just a couple of keystrokes.. (to) move shares in a bond fund into the house charity and secure a tax write-off."

CDMCars.com - Donate your car in Dallas!

The first is CDM's car donation program, which was just launched at:

www.CDMcars.com



Unfortunately, when you Google "Central Dallas Car Donation," the site doesn't come up. CDM's own www.CentralDallasMinistries.org site appears, but this is below the national www.DonationLine.com site that we used to use. In order to get more "GoogleJuice" for our site, we need to get more publicity for CDMCars.com. If you have a blog or Web site, we would greatly appreciate you linking to this site!

(And if you have a car, truck, boat, RV or plane that you're not using... send it our way!)

Companies that Do Well by Doing Good

Last night, I had the tremendous pleasure of joining Pam Gerber of the Entrepreneurs Foundation of North Texas for her “Spirit of Entrepreneurship” Celebration. Honoring philanthropist and business leader Craig Hall, the event was held at EFNT's office at the Communities Foundation of Texas (one of the more beautiful buildings in our city, thanks to the Caruth Family's generosity).

I loved the title of the event: "Building Philanthropy 1 by 1 and 2X4," in honor of Mr. Hall's great record of philanthropy centered on helping individuals and his successful real estate/construction work. The centerpieces were equally brilliant: hardhats and ductwork filled with flowers.

The event was kicked off by Brent Christopher, President and CEO of the Communities Foundation. Pam Gerber then gave out several "NorthStar" awards to an individual and a company that have made a difference in our community: Guy Hoffman (CEO - Metellect Corp.) and TelaDoc Medical Services.


Afterwards, local philanthropist Charles J. Wyly, Jr. introduced the incredibly passionate Roger Staubach for the key note address and introduction of Craig Hall. Mr. Staubach's energy filled the room, and he delighted us all with some on-the-spot jokes about Terry Bradshaw (in response to Mr. Wyly's comment that he had been a Terry Bradshaw fan during Staubach's days at the Dallas Cowboys). He then introduced Craig Hall, whose humility and sincere commitment to "doing well by doing good" was a great joy to witness.

But the real delight of the evening came when Pam Gerber announced the beneficiary of the event: the National Foundation for Teaching Enterpreneurship. Accepting the award was a charming young woman who had won NFTE's local competition in the area of business plans. She will be representing North Texas in the national competition later this year -- and her energy, enthusiasm and sparkling personality showed that she has a great chance at taking the top prize!

I definitely left the night with event envy!

I highly recommend that any corporate leader get involved in EFNT. If you have someone on your board who owns their own business, you should put them in touch with Pam:

The Entrepreneurs Foundation of North Texas (EFNT) promotes and facilitates community involvement and philanthropy for companies. As a designated fund of Communities Foundation of Texas (CFT), EFNT makes it simple for companies to give gack to the community by assisting with organizing volunteer activities for employees, and hosting networking events for senior level management of companies to help grow and strengthen our network of "good corporate citizens."

In establishing a relationship with EFNT, a company networks with like-minded philanthropists while contributing to the greater good of the community. Today there are more than 80 companies in North Texas participating in EFNT, and more than 40 underwriters significantly supporting the effort.

You can learn more about EFNT here:
http://www.efnt.org/