Monday, January 29, 2007

New coin of the realm

Or, another possible title for this post would be: The flip side of the coin

Sunday’s New York Times ran a story on nonprofits that ‘screen’ their donations. This practice is perhaps best embodied by Doctors without Borders, which neither asks for nor accepts donations from:
“…companies or their foundations that derive income tobacco, alcohol, weapons, pharmaceuticals, medical equipment, biotechnology, oil, mineral, gas and other extractive industries like diamond mining.”
This is, of course, the other side of the aligned investing questions for foundations. There were only a few nonprofits mentioned in the article. Most of those mentioned were health-related including the American Heart Association, the American Diabetes Association, and the afore-mentioned D w/o B. It may be that is easier for these organizations to distinguish between their health-promotion goals and those potential funders whose core businesses clearly run counter to these missions.

Other nonprofits, such as The Institute for Global Ethics, point out that they refuse support from funders that are clearly aligned with a specific political position. As the Institute’s President noted, “We’re here to help people how to think, not what to think, and to the extent that people see us as coming from a particular position because of the money we receive, it dilutes our mission.”

One interesting note in the article, pointed out by Diana Aviv of Independent Sector, is the competitive pressure on nonprofits to raise funds. These organizations face real challenges of survival that one might presume would mitigate their ability to screen potential supporters. Something about beggars and choosers comes to mind here.

It is important to note that even with their pressing needs for funds, nonprofits set screens about what money they will take. This complements the aligned investing discussion taking place on the foundation side of the house – where recent research notes a doubling of the “number of foundations screening their investments in the last decade” and “a tripling of the amount of new foundation dollars invested annually in mission related investments.”

I see several important trends behind these kinds of stories. Here’s a list:
• The growing availability and competitiveness of screened investments instruments.
• The rising attention to corporate social responsibility
• Multitudes of new structures for donors to manage and deploy their philanthropic resources.
• The proliferation of social enterprises and hybrid ‘commercial and pro-social’ organizations.
What might all this portend?
• Ever-finer screens on how organizations allocate resources to meet their missions.
• Greater interest in easy-to-use data sources that help users make sense of philanthropic capital flows.
• A blending of legal requirements that govern commercial enterprise and nonprofit organizations into a new class of rules for social enterprises.
• New cultural assumptions about who does pro-social work, who funds its, and how different types of entities act responsibly.

Like many things, these developments are currently unfolding on parallel and seemingly unrelated tracks. But, as we all know, when we follow the money they are in fact quite tightly connected. Best we act now to envision and facilitate the positive changes that such revised social capital markets, structures and assumptions could bring.

What does all this have to do with coins of the realm? Increasing attention to how missions are carried out - credibility and trust - in other words, may be returning to center stage as critical assets for social benefit work.

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