Xigi and WorldChanging have been writing about alternative currencies, an important topic as we think about new forms of social capital. Many of the discussions around new currencies look at the macro level. For example, the global value of frequent flier miles (US$700 billion) is often cited, as is the successful transition to the euro.
But I think we should be looking local. The New York Times ran a story on February 25 about the town of Great Barrington, Massachussetts which has issued its own currency in denominations named for favorite local sons such as Normans (Rockwell) and Hermans (Melville). Local shoppers receive discounts from local merchants when they use the BerkShares. In Minneapolis, Minnesota an experiment in dollars with frequent flier miles/reward points has led to the Dual Currency Systems experiment. Local currencies have been promoted for a long time and can be found across the U.S. (BloomingHOURS in Bloomington, Indiana to Humboldt Community Currency in Arcata, California), in Canada (Calgary, Toronto, Salt Spring Island) and Mexico. And then, of course, there is interra.
These local currencies, and their ties to volunteer hours, local discounts, and circulating money and resources within a community, may have increasing vitality - even in the age of global - as the local grows more important. I attended a spring training game, Mets v Tigers, this afternoon. Between every inning, practically between every batter, the stadium announcer offered a prize, a coupon, a bonus meal, or something from the local insurance agents, restaurants, tire stores, and merchants whose ads filled the program, blanketed the walls, and dominated the jumbo score board.
I thought about this when I checked my rss feeds and saw that Steven Johnson was blogging again. He's been busy (and not blogging often enough, IMHO) as his post was all about the new investors in Outside.in - his placeblogging system that led me to declare hyperlocal this year's second buzz word. Johnson has attracted some big VCs and an impressive list of angel investors - they, at least, are convinced there is money to be made in helping people connect to their neighbors. What currency will these placeblogs use? Can they be a force to expand the reach of these currencies? Will they connect to virtual currencies (e.g. Linden Dollars in SecondLife).
What about placeblogging, local currencies, and mobile phone banking? Can neighbors come together around certain "barn raising," "block party," "food for the sick," or "worker co-op" projects, organize them through place blogs/text messages, and manage the contributions in a local currency that is debited/credited through mobile networks? And if they do so, how will measurers of mutual aid, local commerce, volunteer rates or philanthropy track them.
Here is my proof that we're headed in this direction. Check out Unconference book.
So what for philanthropy? The book's subtitle, "Because the audience is more intelligent than the speaker," says it all.
TravelForGood, a program of Travelocity, is making $5000 grants available to committed volunteers who need financial assistance to participate in a "volunteer vacation" opportunity. Details are here. The program operates in partnership with Travel For Good's partner organizations:
The Futurist magazine ran a series of articles on post-print literacy. Since some of the futurists they quote have been calling for the "death of print" for 30 years, I take these predictions with a fat old chunk of salt. However, the ways that print is changing, and the new media literacies that will be needed, are fascinating to think about in a social change context.
For example, tracking data is a tough proposition when working in populations where illiteracy is the norm. However, mobile phones may change this. As mobile access increases, and as the handsets become useful for everything from video to banking, the need to read may morph into a need to "read" visually. Imagine you were distributing health products in rural parts of Africa. Rather than writing and counting and filing reports, you could use a cellphone camera, take a picture of a sale, send it to a protected website where a pre-loaded inventory of tagged "item photos" would check the items in the photo, deduct them from inventory, calculate the sale, register the prices, order new stock and so on.
Another way that print is changing, and media and media companies are changing, is in the way we think of books. I wrote earlier about a book 'being a wiki at a point in time' and plenty of folks quickly sent me examples. The Institute for the Future of the Book posts about major publishing houses, Random House and HarperCollins, letting browsers search backlists and the content of the books on the backlist. Random House also offers a widget that will let you put this search function for your favorite book on your website.
So what for philanthropy? This slices a couple of ways:
- What about making this kind of functionality available on research and data that foundations use?
- Or if nonprofits and/or donors posted their reviews of certain social issues, community needs, organizations, or evaluation studies?
- How about a complete rethink of what literacy means, who is and isn't literate in new media, how schools need to change?
- What about a new proposal process that isn't text-based, but multi-media, multi-literacy, and globally accessible?
This post from Foreign Policy's Passport Blog outlines the potential of mobile phones as tools for immigrant remittances. Most of the world's poor don't have access to banks - as the microfinance movement has been making very clear for decades. But more and more of them have access to phones - some of this access being related to the microfinance movement itself, such as in the case of the Grameen Phone company.
This raises some incredibly interesting questions about telecoms and village co-ops as financial companies. Talk about a "virtual world" for considering the recrafting of philanthropy, finance, investment, mutual aid, and social enterprise. As we get used to the reality that financial currencies are increasingly digital and intangible, it creates room for 'social currency' - trust, peer support and pressure, and community credibility that form the basis of collateral in many successful microfinance efforts. Cell phones as banks might also open up opportunities where literacy rates are so low as to inhibit transaction processing, record tracking and other 'mundane details' that can derail worthwhile investments.
This is a good article on how nonprofit organizations are using social networking sites to facilitate their work. From the Chronicle of Philanthropy.
Also Marnie Webb's presentation on using web 2.0 tools and Beth Kantor's remix are worth checking out.
...Idealist asked all the people to Imagine a better world. Here's what you came up with.
I assume full risk and hope that Apple Records and/or Yoko Ono won't come after me for copyright infringement for the title of this post.
Sean at Tactical Philanthropy has taken up this issue - how and by whom are social media tools being used in philanthropy - read his post here. These tools are changing fast enough that his post brings up GiveWell (as it should) which wasn't live when I started asking about this in August 2006.
One addition to the list would be the Sustainable Futures Foundation - social network for social investing. On this issue I encourage everyone to check out xigi.net.
Go2web20.net is the best resource I've found for tracking new tools and companies offering social media services. It can - of course - be searched by tag. Currently, there are no tags for philanthropy, nonprofits, donors, giving, etc. and sites like GiveWell or Smartocracy are not on there. (Go ahead, folks, suggest them - it is community media after all). As for blogs on web2.0 stuff, my regular reads are read/write web and the aggregator Web2.0 Workgroup. For blogs that look specifically at where web 2.0 meets nonprofit work, check out Beth's Blog, Marnie Webb's ext 337, Britt Bravo who blogs here, here and here ,and netsquared. And don't forget Allison Fine's old medium (its a book!), Momentum which you can find out about on her blog.
Ashoka's Changemakers program has announced its Entrepreneuring Peace grant winners. Judges chose 11 finalists from the original 158 applications and then voters from around the world picked the 3 winners. Here they are:
- Learning Circles: education for displaced children in Colombia
- Participatory Theatre for Conflict Resolution, Democratic Republic of Congo
- Palestinian-Israeli Private Sector Dialogue
Stanford's Graduate School of Business (GSB) and the Stanford Social Innovation Review are making available the resource and knowledge of the GSB's Alumni Consulting Team (ACT). You can submit a management question and get an answer. Access the resource here.
Lets hope they make this a customer-feedback enabled site.
Poetry isn't really my thing, but as I read through last Sunday's New York Times Book Review I couldn't help but be stunned by the subtitles (what I call "post colonics") of the books listed in the Table of Contents. So here it is. My apologies to all poets.
Post colonics: A poem about what is on our minds
In Search of the First American Explorer
A Love Story
An American’s Encounter with France, Her Father, and the Holocaust
How Cops, Crooks, and Cannibals Captured Popular Fiction
Our Part in the Creation of the Universe
My Story of Growing up in America
The Dark History of Medical Experimentation on Black Americans from Colonial Times
to the Present
Plunder, Racial Politics, and the Nazi Welfare State
Fate, Freedom, and the Making of History
How Politicians and the Terrorism Industry Inflate national Security Threats and Why
We Believe Them
Why we must Embrace China as a Partner or Face it as an Enemy
The Hardest (Working) Man in Showbiz
So what for philanthropy? Well, other than my confidence that I won't be honored by the Ruth Lilly prize for poetry, I just think this little, odd look at book titles might say something about what is on our minds. There's a whole lot of nationalism on the list, among other things. Anyone else want to offer up some observations?
In case you don't believe me, here is David Pogue (NY Times Circuits Columnist) on his experience in SecondLife, including a video from his appearance on CBS News Sunday Morning.
Pogue doesn't focus on the community/nonprofit/philanthropic side of 2L. At least, not intentionally. But his interview with Philip Rosedale, founder of LindenLab which makes 2L, is revealing in lots of ways regarding the development of an independent sector in the virtual world.
Here's what Pogue and Rosedale said:
Here's my interpretation of this. In other words, when you enter 2L as a 'newbie' people will voluntarily help you. They'll show you around, answer your questions, help clothe and shelter you, give you money. Now, remember what's going on here - behind every avatar is a human being. Spending his/her time hanging out in 2L. So people are allocating their discretionary time to this virtual world, and when they get there what do they do? They help people they don't know - they VOLUNTEER.
DP: The first time I tried Second Life, I must admit I was a little bewildered. I was a little bored, because I couldn’t find anyplace to go to find people. Do you have any advice for newcomers?
PR: Second Life is a little bit like being dropped from a helicopter into New York City, and all you have is sort of a tattered bus map. You have to ask other people.
The biggest piece of advice is to find friends. Go and say hi and ask someone for help. And what you’ll find is that because the environment is a little tricky to get around in, people are eager to help teach newcomers those skills.
Here's more from DP and PR:
Here's my interpretation. There isn't much of a government in 2L. Some community rules and community enforcement, but no overarching governing structure.
DP: Have you ever had to punish a member?
PR: We have banned people for repeatedly violating the sort of high-level rules of just basic tolerance and non-harassment, yes.
DP: And you banished them to The Cornfield?
PR: (LAUGHS) We’re always doing experiments. And there was a period of time where we would give people suspensions rather than kicking them out of Second Life altogether. And one of the funny things that somebody here at the office came up with was the idea that you’d be incarcerated. You could log in, so you could use Second Life, but you’d always be placed in this strange cornfield that had this old tractor. There was nothing in it– it was a corn field, and then this old tractor. And then a television that sat there incessantly and played these 1950s “Be a Good Citizen” kind of movies. Great stuff.
And finally, from Pogue and Rosedale:
"PR: When you watch people in Second Life, there’s initially a desire to just have everything that you’ve ever wanted: to be very beautiful, to be very sociable, and to be very engaged in a kind of fast-forward version of consumption as we know it in the real world.
But that’s the first couple of months. And then after that you’ve almost reached a Zen-like state where you can say, “Well, I’ve done everything, but what more is there? Then you start to ask questions like, “Well, maybe I just want to build a temple on a hill and meditate. Or I want to contribute to a community in a way that’s not something that was obvious when I came in.”
My interpretation - given free reign over what to do, people serve themselves first and then others. They make things. Some they give away (time, help, objects) and some they sell (hence the growing market economy in 2L which has received so much attention).So what does it mean? Well, it makes it interesting to think about what philanthropy/social good/community action is and how it acts in an environment with an economy, no government, and community-enforced codes of conduct. If you really wanted to redefine philanthropy, a virtual world seems like a good place to do it (or, to watch it happen).
If you do want to see some of the cooler nonprofit stuff going on in 2l check out these links, kindly sent to me by Susan Tenby of TechSoup and TechSoup SecondLife. In world, she is known as Glitteractica Cookie, if you're already in 2L and want to find out more.
# We have ongoing weekly Friday meetings where we discuss our various projects in the TechSoup space in Second Life. These meetings occur at 8:30-10am PST.
# We had an exciting mixed-reality event, and you can read all about it here http://beth.typepad.com/beths_blog/2006/07/reflections_on_.html
You can see some video (unedited) of it here:
(When we get it edited, I will give you the link to that more easy-to-watch formatted piece)
# We are working on an FAQ for Nonprofits in Second Life with tricks, tips and freebies for new residents. This will be for the Nonprofit Commons residents, and it will be an office in a box for NPOs in SL.
# We have a Nonprofit Directory that will teleport you around to visit other nonprofit organizations in Second Life
# We have a google discussion group for our ideas here:
# We have our bookmarks and inages saved under the Del.icio.us/technorati/flickr tag NPSL:
# To see the images of what this all looks like, check out the flickr tag NPSL, secondlife or techsoup.
Please see the FAQ on what nonprofits can do in SL here:
Please see my interview of a few orgs that are doing good work in-world:http://www.techsoup.org/learningcenter/internet/page5902.cfm
Since 2001 the Global Philanthropy Forum annual gathering has been one of the best conferences on philanthropy. It has sold out every year (2007 included).
This year (April 11 -13, 2007 at Google in Mountain View, CA) the conference theme is "Financing Social Change: Leveraging Markets and Entrepreneurship." You can read the conference program here. The Forum makes an edited transcript of each annual conference available on its web site - previous conference transcripts are archived here. The 2006 transcript will be available closer to April, 2007.
The Forum also posts video of its plenary sessions within a few days of the speeches so be sure to check the website during and shortly after the conference. This year, I have the honor of 'live blogging' the sessions, and I'll do my best to make you feel like you're right there learning alongside me. Join me, here and on the GPF site, April 11 - 13, 2007, live from the Googleplex.
Creating Philanthropic Capital Markets: The Deliberate Evolution was named a "must read" by Sean Stannard Stockton of Tactical Philanthropy. Check out his recommendations here and the rest of the Giving Carnival's recommended reading list here.
Thanks also to the good folks at xigi.net who gave me the inaugural "map of the week" award. The network mapping tool on the site is very cool (as is the whole site) and everyone interested in social finance should check it out.
Thankfully, these sites require even shorter thank you speeches than the Academy Awards so thats it, enough horn-tootin. Cue the music.....
Wikipedia is known for several things - its free, its community driven, its credibility has been questioned (and found to be mostly OK) more times than anyone else's, and its wide-ranging. It also strives - HARD - to be neutral. Just the facts, ma'am.
So now there is debatepedia. Where strong arguments are cooperatively produced - or as the Future of the Book project calls it, "an encyclopedia of arguments." Want to know the arguments for and against the repeal of the U.S. Estate Tax? Here you go. Have some information or analysis to add to a debate on abolishing intellectual property rights - add them here.
What a wonderful tool for drawing in collective intelligence on the challenges and opportunities that philanthropy aims to address. Have information on building sustainable social justice enterprises? Strategies to better educate children? Delivery mechanisms for health care in rural communities? Looking at data from different vantage points, encouraging debate and considering alternative explanations should be a key part of making decisions about billions of dollars. Debatepedia shows that it can be done in an informed and gracious way (sort of like the debate on the Stern Review that the NY Times covered on Wednesday in the Economix column.)
Outline your argument, define success, encourage alternative view points to be aired and shared, and inform your decision and grant making. Cool.
I posted here about leveraged philanthropy and the many forms in which it comes. Think about all the different ways people share information and make decisions - and all the ways transparency is being re-deployed thanks to the Internet. BioMed Central - an independent publisher of science journals - is a wonderful example of what is possible. Authors/institutions pay to get the work published. Readers read for free. (As David Weinberger of JOHO notes, "Because putting knowledge behind a wall with a slot for dollar bills makes our species stupider.")
Reviews are public. Revisions are public. Resubmissions are public. You can see raw data. You can reach your own conclusions. You can disagree, agree, push for more research.
NPR's blog on Rough Cuts is another good example. The behind-the-scenes look at making a new radio program - go ahead, tell 'em what you think.
We're getting there - close to a place where real analysis, research and data that can inform giving (ahem, please note the acronym in this post's title) might fly. And let me know if you hate the acronym (I do).
Thanks to the folks at DonorsChoose for responding to yesterday's post - see their comments here. DC was responding to my assertion that part of the reason DC is so effective is that it supports causes to which donors can relate - schools, teachers, classrooms. Here are the data that DC sent over:
"53% of our donors do not have children. Of those with children, 73% attend or attended public schools. When asked "What about the DonorsChoose mission most inspired you to give?" only 25% cited education ("supporting teachers" or "supporting students") while 67% cited our giving platform ("Directing my dollars to exactly where I want to help," "Level of choice DC offers," "Level of accountability DC offers," and "Ease of giving via the Internet.") The remaining 8% said "Other".
So, my guess that having school-age children was a motivating factor for donors was wrong. However, the data above don't discount my point that donors can relate to the opportunities presented because they themselves went to school. Is it fair to assert that some significant percent of DC donors graduated from high school - thereby experiencing the full realm of K-12 experiences that the DC grant opportunities represent? Does DC have data on the educational attainment level of their donors?
The data above do point to the power of the platform itself as a tool - and DC is (and has been) roundly congratulated for that. I don't - and didn't - disagree with Alter on the effectiveness of the tool. My point is more fundamental, and I'm clearly not convinced that I'm wrong (yet). Donors motivations are not rational. Emotion, empathy, history, personal experience are all factors in what donors support. Technology can help increase their generosity, or direct gifts in ways that might otherwise not be feasible. I don't think technology is going to foster or create motivation where it isn't already present.
Parsing the data above a little more closely actually seems to support this point (of course, I'm good at convincing myself). As the data suggest, donors who use DC don't see themselves as driven by a desire to support education. Their interests in:
- "Directing my dollars to exactly where I want to help,"
- "Level of choice DC offers,"
- "Level of accountability DC offers," and
- "Ease of giving via the Internet."
If this same system were set up to try to attract donors to support other issues - as Alter proposed in his Slate article - how would the technology facilitate that personal connection, the basic understanding and empathy that motivates donors?
There are experts in facilitating this more distant 'empathetic and quantifiable giving.' They include organizations such as GlobalGiving, SavetheChildren, and Heifer International. Online giving to disaster relief - the Indian Ocean tsunami, Hurricane Katrina, and Pakistan earthquake all come to mind - also show that this can be done.
The experiences and success of these tools show how wonderful they are for episodic, event-specific, or one-time giving. Especially when hearts strings can be tugged. But there is nothing technologically magic here - those old magazine ads with Sally Struthers and a forlorn child, that we in the west could support for $12 /year - did the same thing. The technology saves us from having to clip the coupon out of the magazine. It makes the giving faster and more efficient, and in the case of directed options such as DonorsChoose or Heifer International, allows us to know exactly what percentage of a teacher's video camera or a milk-producing heifer we are paying for.
Technology is great - it facilitates, accelerates, and expands existing giving behaviors. What remains to be seen is what needs to happen with and to technology to change those behaviors.
The Urban Institute is hosting a forum for the public (Washington, DC. Seating is limited, RSVP required):
Transparent and Accountable: A Vision for 21st-Century Foundations
Friday, March 2, 2007More information is here. Featured panelists include Joel Fleishman, Eugene Steuerle, Elizabeth Boris, and Marcus Owens. These folks are all important thinkers and writers in the field, and what they have to say matters. But it is striking to me that there is not a "21st Century philanthropist" among them. Or even someone who might be considered a "new" voice on the subject. How about the Alex Steffen from WorldChanging.org? Or Peter Deitz of the First of its Kind Network? Or Susan Tenby of the Second Life Nonprofit Commons? Or..? (who would you like to hear from about 21st C foundations?)
Talk about transparency. GiveWell.net which just launched, and which I wrote about here, uses community reviewers to assess giving opportunities for donors. They've developed and posted their criteria for these reviews. The ratings process includes criteria and scoring on these parameters:
Reviewers also post "unanswered questions" and a list of the sources they used to create their ratings. A more complete description of the process is found here. GiveWell maintains a blog here.
Jonathan Alter claims to have seen the future of American philanthropy, and DonorsChoose is it. In his article for Slate, Alter ruminates on the possibilities of creating similar web-based marketplaces for all kinds of social goods - malarial bed nets, vaccines, art purchases for museums, and cancer research trials. "A private school you have to pay for, a public school you have to fund-raise for.'' Alison Zilversmit, 10, to her 6-year-old brother Jacob Zilversmit, overheard by car pool-driving Marc Zilversmit.
I think he's a tad...hyperbolic. DonorsChoose is very cool and works really well. Alter makes an important observation that 93% of the donors who use the site voluntarily add 15% to their gifts to cover the operating costs. This is important not only because it proved several HBS consultants wrong, but because it may show the value of transparency. The willingness of donors to 'opt in' to pay operational costs may be worth watching. Other sites also provide this functionality - making transparent and optional the operating costs - Network for Good does it online and the Vermont Community Foundation is trying it in the offline realm. Tell people what it costs to provide the service you provide - you may be surprised at how willing they are to pay it.
But beyond the observation about operating costs, I think Alter is wrong. In addition to the disagreements about the role of the market in providing social goods that has been bandied about here and elsewhere, Alter is overlooking a basic fact about the users who choose DonorsChoose. They went to school. They remember what it was like. There is some amount of empathy for the plight of the teachers and the opportunities for the kids. This influences their willingness to give. And would also influence the transferability of the platform to funding other - more remote, less personal - social goods.
I don't know anything about DonorsChoose's donors but am confident in my 'guess' about their educational histories. I'd also posit that there is a good chance many of them have or have had school-age children. And an equally good chance that very few of the site's users have ever had malaria, lived a subsistence life in Sub-Saharan Africa, or bought art of museum quality.* Technology and transparency are good additions to the practice of philanthropy. But they don't replace basic human values and behaviors, like empathy and motivation. What would be interesting to know is what other causes - besides education - does the DC model serve? And where does it not fit.
A final note on funding teachers' classrooms needs. Today's SF Chronicle's gossip columnist, Leah Garchik, ran this little item in her Public Eavesdropping sidebar:
(*By the way, I'd be happy to be proven wrong here, if DonorsChoose wants to share its users' data. New tools are, no doubt, changing how donors act on their motivations. But whether it changes their actual motivations remains to be seen.)
"A private school you have to pay for, a public school you have to fund-raise for.''
Alison Zilversmit, 10, to her 6-year-old brother Jacob Zilversmit, overheard by car pool-driving Marc Zilversmit.
The February 22 issue of The Chronicle of Philanthropy includes an article on the Hudson Institute's February 12 panel, "Aligning Investments with Grantmaking?" The article was posted on the Chronicle's web site on Monday (click here, subscribers only) and appears in the print version (received by subscribers last Friday) on page 62.
Collaborative giving is the Wall Street Journal's (subscription required) term for donors working together. Unleashed by Warren Buffet's gift to the Gates Foundation the trend (with an "n" of 2) was created when The John and Mary Cain Foundation made a by a $100 million gift to the John Motley Morehead Foundation to expand the scholarship program it runs at the University of North Carolina.
This is the kind of leveraged philanthropy I wrote about in Creating Philanthropic Capital Markets. The idea is simple - one set of staff researchers develops strategy, builds relationships, does due diligence, and monitors progress. Their analysis and research are then available to many donors (or to inform larger endowments, as in the Buffett/Gates and Cain/Morehead cases). Here's how it works now. In any specific area you have, say, 20 program officers each analyzing the same organization for 20 different grants. In a leveraged structure, you would have one set of research that would be available to inform 20X the funds it would otherwise have advised. Its less work for the grant recipient, lower cost for the grant makers, and makes more efficient use of the information. Optimistically, there is a potential increase in grant funds available if duplicative costs (staff, research) are eliminated.
Does it lead to group think? Not if criteria and strategy are available for review - donors can "buy in" or not to certain standards, goals, and review processes. Think of it as akin to the industry and company research that independent firms sell to investment banks (and, ultimately, investors). Quality and credibility distinguish good work from bad, strategic from sloppy.
Grantmaking through existing private foundations is one way to do this. Pooled funding through community foundations or federations is another. Global Giving, Network for Good, or Give2Asia, which provide online marketplaces of nonprofit organizations, vetted for donor interest and compliance, represent a third way. Global Greengrants represents another structure - freelance, local advisers identify and monitor organizations that donors from other parts of the world can support. GiveWell, which just launched, is a new approach - community-driven, transparent analysis for donors by donors.
Its exciting to see these kinds of developments, which I've been writing about since 1995, becoming viable through advances in technology, changing donor markets, and entrepreneurial approaches to information sharing. They are a critical step toward creating more efficient and transparent philanthropic capital markets.
What are appropriate performance measures in philanthropy? Once on staff at a typical endowed foundation, how do you know if you're succeeding? How does your boss know? Can foundation professionals be held accountable for success or failure of their grant making strategies? Or, as the title of this post suggests, does "nothing happen if nothing happens?"
The Agitator poses this question a slightly different way - How do you know if a nonprofit is not good enough? Tom asks:
"But how is performance by a nonprofit's leadership team generally appraised? What questions get asked, and by whom?Its hard for those who do the work - even harder to know if those who are funding some of it are performing. Some foundation executives have performance measures that hold them accountable for leverage - attracting "other people's money" to the work they support. Others set performance benchmarks for each portfolio. For the most part, endowed foundations have only one real measure - payout. Did the funds get out the door, credibly and legitimately. Its a measure, but not one that requires anyone to actually accomplish much.
Have you eradicated cancer yet? Stopped global warming? Saved all the children? Ended domestic violence? Eliminated hunger? Produced more literate students?"
What are the best performance measures for foundations? And how do they translate to staff, board, and organizational practice?
Well, I guess its an obvious derivative from micro-finance. Microphilanthropy - otherwise known as group fundraising - is my Second Buzzword of the Year (Hyperlocal was the first).
OK, annoying derivative name aside, Peter Deitz is doing us all a favor by tracking these developments and how they are assisted by the web. Check out the First-of-its-Kind site, particularly the "what it is" page. He's tracking weekly top ten campaigns - check them out here. Thanks to Beth Kanter for pointing me to this.
At least its not called microphilanthropyr, googl-anthropy, e-lanthropy, iphilanthropy, or some other such nonsense.
Friday's New York Times had a story on the rise in prizes as a philanthropic tool. The article focused on the X Prize - which has already awarded a $10 million prize for space travel and is raising funds for solutions to poverty, health and other social challenges. Richard Branson notably announced a $25 million prize for solutions that can remove carbon from the atmosphere. MIT, Yale and other universities (often in conjunction with venture capital firms and investment banks) hold annual "business plan contests."
What are prizes good for? The Times article presents the point that they are good at providing incentive to innovation, though not necessarily the right tool to find sustainable businesses. It quotes Paul Kedroskey:
Prizes also favor entrants who can pay the costs of participating themselves - as prizes are awarded after something is created and no capital is provided to prototype or try something.
“There’s no market merit to any of this,” said Paul S. Kedrosky, executive director of the William J. von Liebig Center, which studies venture capital trends. He argues that the prizes might be good for generating press, or buttressing the egos of donors and winners, but not particularly valuable at leading to profit-capable companies.
“It’s a naive assumption that good science is good business,” he said.
The Times has run other articles on prizes as ways to foster innovation. The X Prize is certainly an interesting blend of philanthropy and venture finance. It is one more sign of how the traditional divides between market and social solutions are blurring and is itself a compelling example of new social finance tools. But prizes are not the answer to every challenge. Just as Kedroskey argues they may not find good businesses, prizes also won't find solutions from those who cannot afford to participate in the contests.
Book, (n), A wiki, printed at a specific point in time.
At least that's how I see it. And how I'm hoping my publishers see it. Maybe I'm just trying to justify my short(ened) attention span, my desire to share ideas and gain input as I go along, and/or my fascination with writing on the web. But it seems to me - as I distract myself from book manuscripts to blog and build a wiki - that books (nonfiction, contemporary) should be supported by conversations and exchange like that which can occur through a wiki. I, the "author" frames the subject, posts the pages and sections (chapters), makes the argument(s), presents the evidence, draws conclusion(s). Others participate, re-frame, add, subtract, take issue with, counter-argue. We all learn. Some of us may change our minds. The work is strengthened. STOP. PRINT. BIND. SHIP. Return to wiki.
I thought it was just me but then I checked back in over at the Future of the Book and a colleague pointed me to this experiment - a million penguins - the novel as wiki.
Don't get me wrong. The bound, portable, long lasting, no electricity or wireless connection needed, feels good in the hand and looks great on a shelf, book is a favorite of mine. I won't contribute to the death of the book. I think the 'conversational media' like blogs and wikis can improve the ways we exchange ideas, the ways we think, and, I hope, the ways we write. But, heck, what do I know? I still read newspapers.
So what for philanthropy? You mean besides the fact that the books I'm procrastinating from writing and the blogs/wiki I am working on are about philanthropy? Oh, I don't know. Its just interesting, that's all.
The Bradley Center on Philanthropy and Civic Renewal at The Hudson Institute has posted the entire transcript of the February 12 panel discussion on "Aligning Investing with Grantmaking." You can get it here. There is a pdf to download.
Hats off to Kevin Jones for his comment on "the things markets will not solve." Though he focuses his comments on malaria, he points out that there are certain social ills that -while horrible- don't effect the balance of power or money in such a way that the market is moved to solve them. As Kevin put it:
"...the real tragedy is that those deaths don't disturb the economy, the social fabric of society or any other lever that might cause a change. ... The market has clear and persistent failures. Malaria is one of them. Donations, grants and more awareness are needed and will continue to be needed. The market solves some things. Not all things by a long shot. It takes a mix, a blend of all kinds of capital and other support and energy to build the world we want, imho. ... Market based solutions are just one tool... but other efforts, community organizing, grass roots efforts in Africa and awareness of the problem through church, ngo and other means are the way to address malaria."This rings true with me for several reasons. I agree that markets fail (I certainly hope my skepticism came through in my earlier posts about when do markets make sense - sometimes irony doesn't fully translate). I fully agree that we need 'other efforts' to address our complex social challenges. As I've said many times, no single sector is responsible for creating hunger, injustice, illness, cultural degradation or environmental damage - no single sector is going to solve them either.
What I find striking about Kevin's comment is its failure to mention the public sector. Now, I'm not an expert on malaria in Africa, and maybe Kevin's omission of the government is due to his specific experiences in Africa around malaria. But - more generally - the omission of the government, the public sector - as an actor on major public health issue is striking.
I recently ran across this same set of beliefs in conversation with another friend of mine. He also felt the market could do many things (in this case we were speaking specifically of microfinance), and that to the degree that commercial microfinance efforts reached the "poor but not destitute" it would make the pool of "truly poor" much smaller, and therefore government would have fewer to care for. I wish I believed this. But, as American experience shows on every issue from public education to public health to infrastructure bonds and affordable housing - the government can't raise revenue to serve "only the poor." Since we must tax ourselves to provide government services, we the people keep insisting that services to assist the poor not be only for the poor. Look at Head Start, school bonds, and housing bills for proof. To get the money from those who have to provide for those who don't, governments typically have to create programs that serve more than just the truly poor.
Which begs the question about the role of "other efforts", as Kevin calls them. I believe we need more than markets, and that community activism and NGOs can (and do) do amazing things. But we also need public supports - private (be they voluntary or market-based) solutions alone will not succeed.
What I really believe is that we need to create our solutions with more complete, complex input and coordination across sectors. Social enterprise is good, and should be developed, implemented and expanded with specific input and understanding about what the public and NGO sectors are also doing (or could do) in an area on an issue. We need cross-sector entrepreneurs, I believe. Leaders and doers and thinkers who can build effective enterprises that are developed with a clear understanding of these other forces, an ability to try to influence them, and a recognition of who is really serving whom.
Three posts caught my eye on this issue today, and I smiled as I remembered how I used to get asked to leave the room when I defined philanthropy as an industry and now, well, gee, everyone thinks so.
Sean Stannard-Stockton over at tacticalphilanthropy.com notes the creation of disparate business - tourism, media, and investment management - all with a focus on philanthropists as customers. He should add in there the rise of advisory firms, technology companies, and multi-family offices that target philanthropic individuals as clients.
Over in the UK, on the other hand, the issue of philanthropy as business is raised to make a very different point. Michael Schrage, writing in the Financial Times, discusses the difference between corporate social responsibility (in which good works are secondary to the institution's role as a business) and philanthropy, in which the organizations are in the business of good works. His point - that the standards of transparency and accountability to which we hold businesses that do "good works" is surprisingly higher than that to which we hold the "good works" businesses. Schrage goes on to point out the differences in how this is being regulated between the UK and the US.
Which brings me to the third post - started by a comment on this blog and shifted over to xigi.net where Kevin Jones correctly notes that the lack of structural incentives to transparency are the real issue for philanthropy, and good ideas, bold media investigations, and technology are not enough to change those structural issues.
Picking up where time made me leave off yesterday, here are some additional ideas that may have been ahead of their time - might we be ready for them now?
6. Re-package the best information that foundations, public agencies, and investment analysts collect on vertical segments of the social sector - education, smart growth, agricultural innovation, health outcomes - into usable, donor friendly resources that others providers of philanthropic capital (donors, lenders, social investors) could use.
This idea is presented in some depth in Creating Philanthropic Capital Markets: The Deliberate Evolution
6b. For foundations: Develop analytic connections between industry sector analysis on investment side of foundation house and social sector analysis on grantmaking side of house. For example, use knowledge and expertise on health care industries and investment possibilities to inform analysis of health care structures on grant side. See Foreign Affairs article and roundtable on Challenges of Global Health.
7. Help donors and foundations with similar interests find each other. Take advantage of common technology platforms (MicroEdge, FoundationSource) to build shared data sources that funders can use to help find other partners.
8. Provide high quality, data/analysis snapshots to donors, boards of directors, foundation execs, social investors in the forms they need it, when they need it - create a subscription service for research briefs on issues of interest. See, for example, Geneva Global Reports, the Grantmakers in Education cases on grantmaking principles, and the education futures map from the KnowledgeWorks Foundation.
9 a. Develop sector specific indices (see globalgiving index for a start) on revenue and investments in certain sectors. Use CSR indices and AccountAbility Keystone Project as starting points.
9 b. Provide data and analysis that will help social investors and philanthropists track revenue flows by market segment, issue, geography. (start with something like xigi)
10. Encourage experimentation in organizational form as well as in capital markets to encourage cross-sector solutions. See, for example, Community Interest Companies in the UK and ideas for "for-profit" charities.
I just had lunch with an old friend. In addition to catching up on life over the last many years, he and I had a great chat about philanthropy and what is possible. I'd been out of touch with him during a period when I'd run several ideas up several flag poles, only a few of which made it to the top and stuck at the time.
However, some of them resonated with him. We covered topics from changing consumer expectations, new abilities to share data, the changing scale of philanthropic dollars, the new dynamics of global economies, shifting sectoral relationships, the opportunities for product/service businesses, the best delivery mechanisms for certain social goods, and the role of public and private - and how all of the above relate to options for activists and donors. (Typical lunch time banter)
So here are some of the old ideas. By old I mean within the last decade. Do any of these resonate with you?
1. Philanthropy needs more efficient ways of sharing content and analysis on social issues and solutions.
2. Leveraging other resources (attracting "other people's money") to issues of concern and strategies that work should matter to philanthropists - and they might be interested in tools/resources to do this.
3. There are roles to play in addressing global social issues for all sectors - commercial enterprise, independent organizations, individual activists, and the public sector - but all too often 'solutions' are developed within one sector without adequate/meaningful connections to or leverage on the others.
4. Metrics and benchmarks that help donors develop a portfolio of giving options would be useful. Knowing how to develop strategy that considers the effectiveness of different philanthropic vehicles (social enterprise, foundations, DAFs, shareholder activism, investing strategies, volunteer time, etc.) requires metrics that get at commitment and impact, not just costs or ROI.
5. We are hopeful.
I'm going to go back through the files and dig up some of my old work on giving portfolios, social investment reports, and metrics. Maybe the time has come.
What follows are my prepared remarks from today's Hudson Institute Panel on Aligned Investing. The remarks of my fellow panelists and a transcript from the full session should be available in about a week - will post it when I get it.
If you'd like a copy of this in pdf , send me an email and I'll send it along.
Remarks prepared for the Hudson Institute Panel
Copyright Lucy Bernholz. 2007. All Rights Reserved.
Tools for Philanthropic Success
Thank you for inviting me to speak with you today.
My goal, my work, is all about helping philanthropic individuals and institutions do their work better. We bring data, research, analysis, strategy, and measurement tools to people who have put their resources where their personal interests and passions are.
The American philanthropic industry is one of this nation’s greatest inventions. Its diversity, freedom, and scope are unmatched. The system allows all of us to make decisions about how we want our charitable funds to be used. It requires only that the funds be accounted for, used ethically, and for legitimate charitable purpose.
I frame the issues this way because philanthropy is an odd beast – it is personal, fragmented, and anonymous. It is also strategic, brand-oriented, and – in the aggregate – enormous. Its most generous participants – as measured by percent of net worth given – tend to be the poor, not the rich.
I also believe that whatever causes individual or institutional philanthropists choose to support, they do so because they really want to make those things better. The definitions of “problems” and “better” range across the full spectrum of American diversity – political, racial, religious, gender, sexual orientation, and geographic. A foundation for free market education is as legitimate as one for the preservation of Marxist theory. Foundations can support pro-life organizations and they can support pro-choice organizations. Though you probably can’t find one that is working on both side of that issue.
While the range of issues they can support is almost limitless; the number of tools that philanthropists have at their disposal is rather small. They have really 7 things to bring to the table: money, knowledge, time, expertise, connections, patience, and independence. Using each of these tools well, and making the most of them in combination, is the challenge for successful philanthropists.
Endowed foundations are usually thought of in terms of only one of these tools – their money. So far everyone on this panel has noted the size of certain foundations as being relevant to the reasons they should do one thing or another. I’m much less of a size freak than others – I don’t equate bigness with effectiveness.
I do equate strategy, knowledge, and alignment with effectiveness. Which is why it makes sense that you won’t find one foundation supporting both pro-life and pro-choice activities with its grant funds. Similarly, it makes sense that a funder wouldn’t support a set of organizations with its right hand – (its grant dollars) – while investing in other organizations with its left hand – (its endowed dollars) – that are odds with the first.
When I consider the chance to use 100% of my resources to accomplish my goals versus using 5% the smarter choice is to use more of what I have available.
When I consider the opportunity to apply effective management principles to both the selection of grant investments and the selection of asset investment choices it makes sense to do both.
And when I consider that endowed foundations are essentially in the business of choosing management teams and making investments in them – on both the grants side and the investment side – it is clear that what foundations need are clear, consistent principles of good management and wise investing on both sides of the house.
Actually, I stole that last idea from a certain investor named Warren Buffet. Buffett has often said, “I never made a good investment in a company with bad management.” He has practiced this for decades at Berkshire Hathaway. Buffett also use these principles to explain his choice to invest his philanthropic dollars in an established foundation. Management matters.
So what does using endowment dollars to advance a social mission have to do with “good investments and good managers?” Just about everything.
There are more than 38,000 public companies in which you can invest your money. Obviously, we need some kinds of screens to whittle this number down to a manageable portfolio. Many of the screens investors use are quantitative. But businesses are creatures of context and leadership – and quantitative measurements are not all that good at measuring either of those variables.
Qualitative management screens are what help at this stage. How to find the leaders to back, the external conditions that will force change or require innovation, or understand customer trends – these are what hedge fund managers, angel investors, venture capitalists, industry analysts, and, yes, Warren Buffett, use when making qualitative judgments about management.
There is a set of these qualitative management measures that look at how a company will succeed given the limits of our environmental resources – what economists call a “carbon constrained economy” and what the rest of us –Jon and his AEI colleagues notwithstanding - call global warming. These measures have actually served as “searchlights” in finding companies that are leading the way on alternative fuels, clean technology, and sustainable business practices. The result – Toyota ROI is 10:1, Ford is flat, GM, hmm, not so good. The result – a better bottom-line for the companies, a better return for investors.
There are sets of these qualitative management measures that look at social issues – how the company values a diverse management team, how it treats its employees, how it seeks a workforce that represents and reflects the demographics of its desired customer base. Once again, these measures are helping investors identify companies with lower employee turnover, greater innovation, and more profitable R & D. The result - a better bottom-line for the company, a better return for investors.
Finally, excellent companies need both top-notch management and high quality governance. The qualitative management measures that screen for governance standards help investors spot problems before they show up on the P & L statement, or worse, with board members doing the “perp walk” on the evening news. The result – a better bottom-line for the company, a better return for investors.
These are predictive measures. They are tried and tested that help investors select the best performing companies in their classes.
There are also opportunities for investors to use their role as shareholders to effect change at companies that might meet some, but not all, of the management standards. While we think of recycled paper as a standard option nowadays, available at any office supply store, it was shareholder activism that led places like Office Depot and Staples to stock these options. It was shareholder activism that moved HP and Apple to adopt goals for use of recycled products, Time Warner to change the paper it prints on, and Coke and Pepsi to source recyclables for their soda bottles. The results –better bottom lines for the companies, better returns for investors, foundation missions supported.
Finally, when resources are limited its always good to find a way to use them once, get ‘em back, and use ‘em again. Taking a lesson from community banks, credit unions, and even microfinance mavens, more and more endowments are discovering the ROI they can achieve by making some of their assets available to communities in the form of low-interest loans and program related investments. The money is invested directly in communities or enterprises that further the foundation’s mission. The investment/loan is paid back and the foundation does it again. These activities truly bring both sides of a foundation house together – the grant side and the investment side – in pursuit of the organization’s missions. The result – a better bottom line and social goals supported.
There are tools, indices, investment advisors, peer organizations, and research available to help endowment managers do this. The industry of social responsible investing – which support the development of the ESG management screens, shareholder activism, and community investing – currently manages 1 in every 10 dollars managed professionally. More than $2.29 trillion dollars of the $24 trillion in managed assets in 2005 were in SRI investments. Historic trend data showing that the indices built around these kinds of investments outperform other major indices – the Domini 400 has bested the S & P 500 over the last 15 years, and foundations with actively managed SRI portfolios have beat the S & P at 1, 3, 5, and 10 year intervals – in both real and risk adjusted returns. There is no tradeoff between investing in line with an organization’s mission and reaping strong returns. Doing the former may even improve the latter.
And this is what finally matters. Endowment directors have a fiduciary responsibility to use the resources under their management for the public good. Not 5% of the resources, all of the resources. The tools of aligned investing – the use of qualitative management screens, shareholder activism, and community investing – allow philanthropists to develop strategies that use everything the foundation has to achieve its goals. Whatever those goals might be.
Paul Hawken and the Natural Capital Institute are setting out to apply good old fashioned crowd-sourced and open-sourced technologies to bring together what he calls the largest movement ever on earth - the sustainability movement. This will happen through WiserEarth. The lead technologist on the project (Oz Basarir) will be speaking in San Francisco on Tuesday Feb 13th - information is here. Or here. WISER stands for World Index for Social and Environmental Responsibility. There will also be a WiserBusiness to share information on sustainable business practices and a WiserGovernment to create public goods for public use.
This ties in nicely with the cross-sector theme and model I'm developing over at Wikia. More to come.
There is an interesting post on banks and the role they can play in promoting environmental, social and good governance goals around the globe. The blog - blue dot green - points out that the equator principles serve as a benchmark for banks around the world, 45 of which have signed on. (Of course, as we know from our current presidential administration, signing onto something and then actually doing it are two very different things.)
The Equator Principles come out of the World Bank and its International Finance Corporation, which makes the business case for global sustainability efforts here.
So what for philanthropy? This is all about making investments that adhere to certain principles and/or advance a mission, while also meeting fiduciary responsibilities (read: making a profit). Some may think that aligned investing is a passing fad or empty rhetoric, but it currently accounts for 1 in every 10 dollars under professional asset management. The rate of growth for SRI funds is faster than the rate for managed assets in general, and the funds have outperformed standard fund indices over the last 15 years.
Here's an interesting piece from FIspace on nonprofits buying rights to drug research that would otherwise languish in the 'pure' research side of the house. When academics can't interest the commercial pharmaceutical companies in bringing these breakthroughs to market groups like the Juvenile Diabetes Research Foundation or Myelin Repair Foundation are stepping in and using their resources to take the findings from lab to trial.
OneWorldHealth pioneered one way of doing this. The activism by 'disease-specific' nonprofits, the intersections with university offices of technology transfer, the role of federal regulators, and the market opportunities that exist for entities much smaller than the mega-pharm companies just go to show how multi-sector and multi-directional real change can be.
Meadan is an Arabic word that means a gathering place or town square. Meadan.org is an online, global meeting place for "western-Islamic dialogue."
The old town square has been recreated for two communities that desperately need to better understand each other - English and Arabic speakers. The technology isn't ready yet, but go ahead, get ready to talk to your neighbor.
Here are a couple of random posts regarding Internet access and use in San Francisco and beyond.
1. San Francisco Mayor Gavin Newsom proposed and is pursuing city-wide wifi. The San Francisco Foundation and Community Technology Foundation of California are hosting a funders briefing to meet with representatives of the city, Google, and Earthlink. Information on open community meetings is here.
2. A new report finds that seniors, women, and people of color in San Francisco have less access to the Internet than their counterparts in other cities. An excerpt from the report,
"While the total population of San Francisco ranks in the middle ofcomparison city rankings, all of the at-risk socio-economic groups in San Francisco are below average, lagging at or near the bottom of the comparison city rankings in terms of absolute percentage with access to technology at home."
Thanks to Katrin Veclas of NTEN for bringing it to my attention. The report is online here.
3. Nonprofits in SecondLife now have a blog - find it here. This is not strictly San Francisco news, though TechSoup - which coordinates the nonprofit commons in 2L - is HQ'd in SF (and I proudly serve on its board of directors).