The value of human capital


Do you remember Richard Scarry's "Busy Busy World" books? These colorful children's books feature foxes, dogs, cats, rabbits, and worms doing the things that make cities and farms and offices and libraries and schools and firehouses and homes go. They cook food, care for the ill, check out library books, fix potholes, fly airplanes, chase bad guys, and make decisions.*

Sometimes it seems the more we think about systems and enterprises and capital flow the less we think about human capital. We think about all the things we as people have built to help us make the world a better place, but we stop thinking about the people who do the work.

Last week at the Omidyar Network (ON) Executive Forum (#ONEF) I got a good dose of how the Network values human capital. In addition to financial resources (both investments and grants) the ON has a full time executive recruiting team that helps its partner organizations find and bring on managers. In the few years they've done this the team has helped place more than a dozen executives in their portfolio companies.

The network also brings the leaders of its portfolio companies together for several days in the Forum in what I described last week as "mini business school." The speakers included experts in integrative thinking and innovation. The participants had ample time to present their own work and find potential partners, there were one-on-one coaching sessions, breakouts for participants, and opportunities for the portfolio companies to meet Omidyar staff and resource people who could help them.

It was several days of "busy busy world." While Omidyar's network includes commercial and nonprofit enterprises, working on mobile technology, poverty alleviation and government transparency, the Forum was focused on the human side of doing good work. The emphasis was on what the different participants had in common (making decisions in a rapidly changing world, using new sources of information, building revenue streams, managing personnel on a global scale) and not on their different areas of emphasis, enterprise structures, or regional focus.

I've been to a fair number of "grantee network meetings." They tend to be events that sound better in concept than play out in reality. The power dynamic of a funder invitation makes it hard for organizations to not show up or to speak candidly about the time commitment. I asked several of the participants what they got out of the meeting. I begged them to be truthful - "I'm not reporting back to Omidyar, I won't name names," I said. "Please tell me the truth. Is this a waste of your precious time?" To a person, the folks I asked looked at me like I was nuts when I asked that last bit. "Incredibly useful." "Great time to consider my problems with others who share them." "New ideas, new partners and much better connections to more people at Omidyar."

I also heard about 35 of the 60 organizations give 60 second pitches of their work. The entire group then voted for 10 from whom they wanted to hear a full 5 minutes. These presentations were informative, funny, human, and useful. Many of us talk about our "elevator pitches." This was a great opportunity (with countdown clock and all) to give those pitches to a crowd that mattered and get feedback and ideas on how to pitch and what to emphasize. It was more than a "way to share info with everyone in the room." It was practice at doing so with some of the stakes that we face when we really do this. Pedagogically, spot on. And a fair amount of fun. A good tip for other meeting organizers.

I grabbed a fun bit of info. Jennifer Riel, Associate Director of the Center on Integrative Thinking at the Rotman School of Management told a story about a key strategic decisions made by the Toronto International Film Festival (TIFF) founders. The big award at the TIFF is chosen by the audience. The big award at the Cannes Film Festival is chosen by a panel of elite judges. Over the last five years, the films that were big winners at Cannes have gone on to do "so so" at the box office. Over the same time period, the audience award winners from Toronto have been huge hits and have included The Kings Speech, Precious and Slumdog Millionaire (2010, 2009, 2008 respectively) - each of which were popular movies that went on to win many other major awards. Average annual box office gross of the Cannes Palme D'Or Award winners = $16.4 million. Average annual box office gross of the Toronto People's Choice Award winners = $132 million. This example was shared as part of a longer story about integrative thinking. I liked it as an example about crowds and experts.

Yes, it's ironic that three days of human capital investments made me think of books that feature only animals. The #ONEF was a great opportunity for me to stop and think about the people who do the work and their needs for support and to learn - regardless of the issues they focus on or the types of enterprises they run.


*I may be dating myself, as these books go back to my childhood, but since they are still in print I could pretend to have only experienced their joys as an adult.


Endorsement philanthropy and sidecar funds

I've long encouraged donors who do good due diligence to share what they support. I was delighted to spend some time this week at the Omidyar Network Executive Forum (#ONEF on Twitter) - a 3 day, mini business school networking retreat for the many organizations (both nonprofit and commercial) funded by the Omidyar Network.

If you're interested in government transparency, for example, the ON portfolio of organizations is a one-stop Yellow Pages of potential partners. I heard, but haven't verified, that ON's portfolio on this issue is the largest and most global of any funder's. I counted 21 organizations on the website and met individuals from at least 8 of them at the meeting. These organizations, and the ON itself, are working hard understanding both the the costs and reach of the individual organizations as well as their collective potential.*

There are several names for the tactics associated with funding alongside others. A fund of pre-vetted organizations is called a Sidecar Fund - (a 2009 buzzword). In addition to the field of interest funds that community foundations have long offered, there are opportunities such as the Proven Impact Fund at Innovations in Poverty Action and the funds at Philanthropedia. Impact investors are also off to a fast start in this regard, with several "mutual" or sidecar funds being designed as we speak.

The other side of the process is endorsement philanthropy (Buzzword, 2007) Besides offering an actual portfolio of organizations to fund, those who've done the due diligence and research, who've put their own money on the line need to step up and encourage others to look at what they've found.

The human psychology of giving comes into play here as much as anything else - we all look at museum's walls of donors to know who gave, most of us scan the playbill for supporters, we ask for information on board members before we give, etc - we want to know who else gave. This is by no means surefire assurance of anything (see CAI scandal for proof) but it is human nature to want to know who gives to what.

This behavioral trait is the stock in trade of emerging social networks for giving from Craigconnects to Jumo. In their nascent stages both of these networks are "relationship and reputation heavy" and "data light." Note that they both offer open platforms onto which independent, credible data can be loaded, shared (and, yes, also challenged, debunked or verified).

Given our desire to know what others think, it would be great if those who do research, due diligence, and follow up would actively promote what they know and endorse the organizations they support. Sharing good data in and through the many relationship channels that donors and investors use is what is really going on here. As I wrote in Disrupting Philanthropy, "Data are the new platform for change." Those data need to be made accessible, usable, mixable, and verifiable through our proliferating networks.

By linking to the examples above I am endorsing them as examples of the phenomenon of endorsement philanthropy and sidecar funds. There are other examples as well. The point is to look at the reality that donors care about what other donors do. Let's get some good data and information into those discussion.



*I'll be back with a longer post about #ONEF

SSIR Webinar May 17, 2011

Please join me for this discussion on my annual industry forecast, Blueprint 2011: Philanthropy and Social Investing. Tuesday, May 17, 11:00-Noon PST, 2:00-3:00pm EST

In addition to my consulting work I spend my time trying to understand how we create, fund, and distribute shared social goods in the digital age—what I call The Future of Good. I'm a contributor to SSIR and The Guardian UK, and a visiting scholar at the Stanford University Center on Philanthropy and Civil Society.

Two big questions on my mind, which I'll focus on on Tuesday, are:

  1. How can we take advantage of the vastly increasing social economy? In Philanthropy and Social Investing: Blueprint 2011 I point out the likelihood of tremendous growth in private resources for public good. I also point out some of the ways this could fail to happen, the ways it might be offset by public sector cutbacks, and encourage us to think about the intersections between the now ever present distinct options from social businesses to nonprofits, investing to philanthropy.
  2. What are the new rules we need to make the most of this social economy? This is, in essence, the core of a new project I will be working on at Stanford come Fall 2011.

This webinar is for foundation trustees, philanthropic and financial advisors, members of giving circles, and individual donors who need to stay on top of trends in global philanthropy. It is also for nonprofit executives who want to understand the current trends in philanthropy and how to take best advantage of them.

Webinar registrants will have the opportunity to ask questions during the last 20 minutes of the webinar. The webinar will be moderated by Regina Ridley, publishing director of SSIR.

For more information and to register for this pay-per-view webinar, click here. The registration fee includes on-demand access to the webinar for twelve months.

This webinar is part of the 2011 SSIR Live! series. Webinars are presented on the most provocative and important topics that have appeared in recent issues of SSIR and from sessions at the Nonprofit Management Institute. Keep an eye out for future emails announcing upcoming webinars in the series.

New Rules for a New Age

Cross posted at Stanford Social Innovation Review

Late in 2010, as I was writing Philanthropy and Social Investing: Blueprint 2011 I spent a lot of time talking about the importance of the U.S. Supreme Court's decision in Citizens United vs The FEC. In this decision the Court ruled that corporations have free speech rights like individuals and therefore can fund political broadcasts in election campaigns.

I still think this decision is a harbinger of great change for the social sector. It calls into question established practice for nonprofits regarding their advocacy activities, opens the floodgates to hundreds of millions of dollars in contributions that will flow through nonprofits to political campaigns, and shifts the nonprofit landscape as significantly as has the rise of market based solutions to social problems.

Our old mental models of three sectors - public, private, and independent - simply doesn't fit anymore.

But Citizens United is just one example of the shifting regulatory landscape for nonprofits in the United States. Here are some other issues to note:

  • There will be new rules on donor disclosure and tax collection on gifts in reaction to Citizens United
  • The class action suit being considered by the State of Montana against Greg Mortensen and CAI raises whole new issues about donor power and control.
  • We've had calls already for new nonprofit structures.
  • Budget cutting recommendations that include complete revisions of the tax code and would do away with charitable deductions are getting real consideration in DC.
  • B corporations and L3Cs have already changed the landscape for social good by revolutionizing the corporate code.
  • Digital information and the open government movement present new opportunities for thinking about how nonprofits/foundations do and should share their information.
  • Informal networks for change, such as CrisisCommons, present incredible opportunities for new governance mechanisms - at a very large scale.
  • The role of crowds and the transparency movement raise new questions about how to hold organizations accountable. And to whom.
  • Impact investing is gaining all kinds of traction. It brings a whole new set of regulatory actors, including the SEC, FINRA and the SIPC into the social sector.
  • The "sharing economy" is growing and it is already actively considering new rules to guide businesses and enterprises that provide "access, not ownership."
When I put that all in one list I see a potential set of "new rules for a new social economy." Looking at what this means, and what a system might look like if we "started from scratch" will be the focus of a new project I'll begin working on in the Fall at Stanford's Center on Philanthropy and Civil Society.

In the short term, I'll be talking about this, and encourage you to join me and add your wisdom, on a webinar hosted by SSIR on Tuesday, May 17th at 11:00 a.m. pst. The registration info is here.

I hope you'll join us. Then come back here and we'll continue the conversation.

Four more short form ideas, mostly on crowdsourcing

Four more "short thoughts" - will be back with more.

1) Foundations and social media
I'm participating in some very interesting discussions and watching some experiments on this. It's always important to stay up on what Beth Kanter is talking about in this regard, and her report from the CEP conference is one of the best. It's almost time for me to check back in with the good folks at the @IrvineFdn on their experiments. I'm also intrigued by the crowdsourcing effort that Natan is undertaking. For a new media initiative they've asked the community to help design the application process itself. Take a look here.

Now funders are opening up all kinds of things, but the actual design of the application process? That one was new to me. I asked Felicia Herman, Executive Director of Natan, "what are you trying to do here?" She said:

"...we recognize that we are by no means new media experts, and that the field - practitioners, theorists, investors, and users - might have greater insight into how best to solicit (and instigate?) quality new media initiatives. We also recognize that the contours of this field demand a new way of doing our philanthropic business. Opening the design process up to external inputs is one of the ways we're trying to do business differently, as is having a briefer application review process (which responds better to the fast pace of change in this field than our usual process) and a much briefer, different application "form" (which tries to even the playing field between people who are used to applying to foundations for grants and people - especially new media entrepreneurs - who are not)."

Should be interesting to see what Natan learns and how they use it. Go add your ideas to their efforts - we'll all benefit. On another note about Jewish Social Media - check out the Fulcrum Project a crowdsourced repository of media uses/experiments for Jewish community building.

2) I'm fascinated by the Digital Public Library of America. Not only do I think a digital public library is much needed, but the dynamic between the public resource effort to create this and the private sector efforts driven by Google offers a real-time case study of the hybrid social economy in which we now live.

The folks behind the DPLA, which is being coordinated by Berkman Center at Harvard, demonstrated their thorough commitment to public input when I, a complete unknown to them, tweeted an idea I had after reading about the DPLA in The New York Review of Books (here and here) and The New York Times (here and here). My tweet had to do with crowdsourcing the search for "authors of orphan works," a wonky issue of great importance for digital book efforts. A small number of twitter followers responded saying they thought the idea had merit.

That was enough encouragement for me to email Robert Darnton, Carl H. Pforzheimer University Professor and University Librarian at Harvard, head of the project. He soon put me in touch with the staff person in charge, who pointed me to the wiki and group listserv Voila! just like I had shared my idea, people responded, I reached the right decision makers, and I was welcomed to participate more (which, sadly, I haven't had time to do).

That's what this is about - ideas can come from anywhere. Newspaper articles spark thinking which spark conversations which spark more ideas which are then shared by social networks and put to use. Think about how that flow of information, ideas, outsiders, insiders works in your world.

3) The Omidyar Network Executive Forum (ONEF)
I've been invited to attend and blog/tweet from the Omidyar Network's Executive Forum this coming Tuesday and Wednesday, May 17-18. Because of scheduling conflicts (SSIR Webinar, May 17th 11:00 am pst) and participation in the annual meeting of the League of California Community Foundations (May 18, San Diego) I"ll only be at ONEF Tuesday afternoon and Wednesday morning. That said, I'm excited to share what I learn and what this incredible portfolio of organizations will be discussing. This is a first for me - blogging from a funders' meeting of their partners. In ON's case the portfolio includes nonprofit and commercial enterprises, funded with both grants and investment dollars. The network is both a foundation and an LLC investment company working deliberately and directly across sectors to make social change. I expect plenty of food for the future. If you have questions or thoughts for the companies in the portfolio let me know in the comments - if I can ask them I will.

4) On June 6-7 I'll be speaking at the Personal Democracy Forum.
I am jazzed about this - this is an event I've longed to be a part of. I'll be talking about Open Philanthropy - how foundations/nonprofits can unlock their repositories of data the way the #OpenGov movement has done with public sector data. The information gathered in, created by and used in philanthropy are key resources for social good. We are, can, and should be sharing it more as part of our efforts to improve society.

Another one of the (incredible line up of) speakers at the event this year is Jay Rosen from NYU. I saw this exchange on Twitter yesterday (Read the bottom first, from the staff of the PdF conference, then Jay's response is on top):



I thought to myself, "Yep, this is how ideas move these days. Public discussions to conferences to audiences to speakers to outsiders to insiders and connecting discussions across time and space - they are all weaving together."



Sharing Economy


I want to get some ideas up here in short form. I hope to add more thoughts on these next short form posts.

Sharing Economy

Number Six on 2010's Buzzword list was "co-" as in co-housing, co-working, co-car ownership. It was shorthand for the elements of the sharing economy that are really well captured in Lisa Gansky's The Mesh, Rachel Botsman's What's Mine is Yours, and on Shareable.net. This past weekend I attended a GREAT conference on this issue and have a long list of people and organizations* with whom I want to follow up.

Let me just put it this way - if 5% of what these folks are working on comes to pass we will see the reorganization of our society as we know it. I mean it. Government will be different, business will be different, and therefore, philanthropy and the independent sector will be different.

*Short list:
Sustainable Economies Law Center
Mission Asset Fund
TechShop

Apostrophes


(Cartoon by William Haefeli, May 2, 2011, The New Yorker)

Regular readers of this blog know that I have a lifelong inability to correctly use the apostrophe* in the word "it's." Those who read my published work have no idea how much credit I owe to good copy editors. I have, after 48 years, given up. (I'm sorry Mr. Frost and every other teacher since fourth grade) I now try to only use the phrase "it is."

Excuse this non-philanthropy-related indulgence but I need to share this cartoon with the grammarians among you (whom I adore and thank). It is hilarious.

*I found the photo on the blog apostrophecatastrophe. Gotta love the Internet!

2011 off to a bad start for nonprofit trust

UPDATED: May 9 2011 - a class action lawsuit alleging fraud has been filed against Greg Mortenson and CAI.

UPDATED: May 6, 2011 - According to the LA Times, the IRS will investigate the Kabbalah Center, a Los Angeles-based nonprofit associated with pop singer Madonna, for tax evasion.

It's only May and so far in 2011 we've had the Fiesta Bowl scandal, a political takedown of Muhammed Yunus, the revelation of Bristol Palin's spokesperson pay "imbalance," and Three Cups of ... Questions about Central Asia Institute and Greg Mortenson.


All said, not such a good year for trust in nonprofits.

New News is Great News

And now, for a personal announcement:

I’m delighted to share exciting news. Fourteen years after founding Blueprint Research + Design, I am selling the firm to Arabella Advisors.

I will become a 1/2 time Managing Director at Arabella. The rest of the Blueprint team is also joining Arabella - we effectively become the San Francisco office of a national philanthropy advising firm.

I also will expand my role at Stanford's Center on Philanthropy and Civil Society as a Visiting Scholar. At Stanford I will be jointly launching a research project on global social sector policy and trying to weasel my way into their athletic facilities.

I will independently maintain all of my writing (this blog, tumblr, twitter, slideshare, scribd, issuu, annual industry forecast, etc.) I intend to ramp up my writing quite a bit over the next several years. (Yes, I'm still working on the book) As always, my writing is my writing - my opinions and my mistakes (in other words, "don't assume anyone else necessarily shares the opinions expressed here").

Thanks for reading and I'm looking forward to continuing our many conversations.

Whee!

Two big questions on the social economy

There are two overarching questions on my mind.

  1. How can we take advantage of the vastly increasing social economy? In Philanthropy and Social Investing: Blueprint 2011 I point out the likelihood of tremendous growth in private resources for public good. I also point out some of the ways this could fail to happen, the ways it might be offset by public sector cutbacks, and encourage us to think about the intersections between the now ever present distinct options from social businesses to nonprofits, investing to philanthropy.
  2. What are the new rules we need to make the most of this social economy? This is, in essence, the core of a new project I will be working on at Stanford come Fall 2011.
I'll be talking about both of these things, and learning from your questions, on a webinar with the Stanford Social Innovation Review Tuesday, May 17 at 11:00 p.s.t. You can register here.

I'd love to focus this as much as possible on your questions. If you'd like to do some homework in advance of the session, you can purchase a discounted copy of the Blueprint 2011 annual industry forecast. Please send me questions about the social economy via twitter @p2173 or in the comments below. Thanks and hope to "see" you on the 17th.