Sunday, January 27, 2008

The problem we'd all like to have...or would we?

There is always a bit of a wink and a nod when philanthropists, foundation staff, or foundation board members tell other people what they do - "We give money away" or "We put capital into making society better." Often the other person will wink and nod and say, "I'll take some" or "Gee, tough job" or something to that end. And then the philanthropist falls back on the old canard (credited to John D. Rockefeller), about it being easier to make money than to give it away, or, as was recently noted in the gossip column of the San Francisco Chronicle:

"I was doing all this philanthropic stuff, and then I just thought, f- it, it's just a lot easier to make money."
Man chatting with woman, overheard at Fillmore and Sacramento

But sometimes, as in the case of as reported in today's New York Times, the level of interest in giving money away actually does become a problem. Rob Walker's Consumed column in the Times Magazine is titled, "Extra Helping" and it looks at what happens when the "supply" of people that want to loan funds to entrepreneurs through Kiva overwhelms the "demand" side - the number of vetted entrepreneurs and their projects/enterprises.

Walker looks at the media attention that Kiva has received and seems to focus on the growth in supply as a result of a great system, good PR, and terrific media attention. He also touches on the fact that Kiva issued more than $2 million in gift vouchers over the holidays, and needs to make sure they have viable investment opportunities available when donors come looking to cash those in.

Walker hints at, but leaves us hanging, on a couple of other key parts of this equation, so here are my questions after reading the piece. They fall into two categories, demand and supply (for and of capital, that is).

  • It is hard to find and vet "safe" investable entrepreneurial projects around the world - the due diligence is time consuming, has many layers of reporting, and involves real humans, not just "inventory" - are there more efficient ways to share information on these opportunities (in both Kiva's sweet spot - social enterprise - and the rest of the social good industry - meaning public benefit companies, nonprofits, NGOs, and in some cases public sector options - see donorschoose, for example)
  • How can the system move to a next tier of funding for these enterprises - from initial angel funding such as Kiva provides to early stage social venture capital for SMEs, for example?
  • Kiva's temporary solution - get more investors by capping the size of individual investments - is an interesting twist. Is it good for the enterprises in the long term or not? What does it mean for Kiva in longer term to have to package many more small gifts into investments? Greater diversity and reach of support, but much more work on each deal.....?
  • Why are donors so interested in this model? Is there something sustainable in their interest and, if so, how can it be expanded to other sectors?
  • Does the interest rest on the global nature of the enterprises, or could domestic emerging markets be served by a Kiva-esque system?
  • What do we know - and what do we need to know - about the capital suppliers who use Kiva that will help us better understand 21st century philanthropy and social enterprise ?
Last night I was on a panel with two venture capitalists talking to the board of a foundation. The topic was "philanthropic capital markets" - how they work, how they are changing, where this foundation might fit into them, and what else we need to know. Given the Kiva story and the great discussion last night, as well as lots of other interesting work, I guess it is time to update the book. Which I'd like to do through a wiki - (Code 2.0 is a model of what I have in mind). Anyone want to help?

Thursday, January 24, 2008

Making sense (or trying to)

Here is what today's news brought:
  • Economic stimulus package in the U.S. - - $600 check is in the mail for American taxpayers.
  • Additions to the list of private universities recalculating their own rules for financial aid and deploying a percentage of their endowments to provide tuition discounts and grants to lower and middle income families.
  • News from Switzerland that Bill Gates is calling for companies to deploy their human talent to solve global social problems. This merits a new term - Creative Capitalism*
  • The U.S. Senate inquiries into endowment practices continue to demonstrate the long-recognized trend - when the economy tanks, legislators/regulators look for nonprofit reform.
  • This time, unexpectedly enough, even the kings of capital are calling for more/new/different regulation - here is George Soros on the need for new oversight of world financial markets.
  • A French trader bets and loses $7 BB of his bank's money before anyone notices - ooops.
  • The New York Times asks if Americans should reconsider tax preferences on philanthropy and floats some "trial balloons":
    • "Perhaps the government should demand a role in charities’ allocation of resources in exchange for the tax deduction. Or maybe the deduction should go altogether."
  • Nonprofit advocates and supporters get organized and ask candidates for the U.S. Presidency a series of questions about their stances on the sector.
How do you make sense of this kind of news? Here are some possibilities I've been thinking about:
  1. "In times of recession, war, and vast income/wealth inequality major nonprofit organizations - which are part of the "public problem solving" sector - will get more scrutiny because both the needs are greater and the rest of the sector is struggling?"
  2. "The regulators should regulate, the nonprofits should meet scrutiny, and the titans of commerce can say anything they want - at the end of the day their job is to provide jobs and economic growth."
  3. "Increasing regulatory scrutiny over nonprofits - even those that (collectively) control 100s of billions of endowed dollars - is less politically risky than taking on multi-billion dollar corporations or ending multi-billion dollar military spending."
  4. [Your analysis here]
Any of these options might fit, as might blends of them, and other I didn't think of. Then there is always the next question: why does any of it matter?

Here are three reasons I think the questions matter -
"While the corporate leaders gather in Davos and offer up solutions and strategies, and the political leadership does the same, where is the collective voice of the nonprofit or philanthropic sector on any of these issues?"

One also might ask: "Is all regulation reactionary or is anyone offering up new ideas about how to think across these issues?"

And then there is this: "In our information age, post-industrial global economy do these traditional roles really still hold?" Does the public sector regulate, private sector fund, and nonprofit sector advocate and act? And, if this is true, what happened to all the talk about blending, blurring and fourth sectors? Does that only hold during boom times? What will bust times bring to these sectoral roles? Can we get change if we play the same roles?
What do you think? How do you make sense of what is happening?

* I have another question about Gates but it is on a whole different topic than the rest of the post. I'll put it here as a placeholder - If the founder and leader of the leading company in an industry announced they were shifting gears and were about to devote more time to that industry than ever before, don't you think there would be some kind of visible/tangible/reported on "buzz" among his/her peers at other companies? Yet, we're only five months away from Bill Gates taking a full-time job in philanthropy (where his foundation is largest in terms of assets), and there is nary a peep from peers or others. What is that all about? Why not frame a whole new set of philanthropy-wide discussions about how to leverage his participation? Welcome him into the game and toss out some ideas about what his "human resources" bring to the table?

Tuesday, January 22, 2008

NYT Editorial on public/philanthropic spending

Today's NYT has an editorial that speaks directly to the intricate relationships between public spending, public policy, and philanthropy. I touched on this relationship in this post. It is at the heart of my book and is critical to my ongoing use of "philanthropy as regulated industry" analog.

The Times takes on the interconnectedness and strengths of each sector directly. Read the editorial here. These are critical issues to consider at all times, but especially during an economic downturn, a period of vast income/wealth inequality, and heading into leadership change. In other words, at times like these.

Funding Dr Martin Luther King, Jr.

(Cross-posted from The Huffington Post)

Yesterday in the U.S. was Martin Luther King, Jr Day. It was pouring rain in San Francisco, where I wrote this, but the several hundred people I marched with in Dr. King's honor were not deterred by the weather.

I think a lot about foundations and philanthropy and strategy. I've heard others ask, as they reflect on the increasing "professionalism" and "strategy" of today's foundations, if any of these organizations would have funded Dr. King's work in the late 1950s and 1960s?

As I walked and chanted up 3rd Street, I wondered if there were any foundations out there today that would fund Dr. King's 21st Century equivalent? And how would they know who he or she is? We'll all be the better if we can find positive answers to these two questions.

One can argue that the Civil Rights movement was stronger because it was funded from within - from the time and donations and sweat and blood and tears of the people making it happen. I think there is truth in that argument. And I think there should be a role for philanthropic foundations, outsiders, in supporting social movements, civil rights, and social change. Maybe there still can be.

Monday, January 21, 2008

Davos - collaborative innovation

On Sunday I went down to San Francisco's Ferry Building to watch the 8 teams of architects participating in "The City of the Future" competition build their models. They'd had 7 days to come up with concepts, 3 hours to build the models (in public), and 15 minutes to present their concept to the judges. The competition is part of a History Channel show.

As I watched these teams, I was impressed by many things. First, in a very short time frame they had come up with vastly different themes - though higher water lines, the cumulative effect of garbage and the "victory" of mother nature over built environments seemed somewhat common across all 8 visions of San Francisco in the year 2108. Second, seven of the eight firms are professional architectural firms - who had clearly put in this effort around and in between their client responsibilities and come up with full-fledged themes and models and exhibits. Third, a team of students from Cal Poly's exhibit was indistinguishable from the pros' exhibits - in terms of creativity and craftsmanship. Fourth, all of the team members looked like they had slept and showered - something I remember very little of among the design and architecture students I knew in college around charrette time. Fifth, under pressure, and sleep deprivation (hidden as it may have been), and public scrutiny, and cameramen, reporters, and small children weaving in and out as they assembled their models, the teams seemed calm and happy. I overheard one team member say - "Only one disaster so far - the plexiglass broke - its going great!"

The whole thing struck me as a nice fun lesson in collaborative innovation. Which is the theme of this year's World Economic Forum conference in Davos, which runs from January 23-27. One thing Davos has done really well the last few years in integrate the web and internet tools into its conference offerings. This year they've expanded the pool of bloggers, have launched a YouTube conversation, and are using twitter and SecondLife to get folks involved.

The interesting question is - will any of the talk about collaborative innovation at Davos yield anything as interesting as the acts of collaborative innovation taking place around the City of the Future questions?

So what for philanthropy? Well, I admit it, this post may be a bit of a stretch - except that it touches on my regular themes of innovation, the need to try new things, the importance of cross-disciplinary/cross-sector discussion, the potential of design thinking and methodologies for philanthropists, and I got to use the word charrette, which is one I have always loved. Thanks for bearing with me.

Friday, January 18, 2008

What does transparency look like?

What do nonprofits really think about foundations? There are several sources of information about this - occasional reports from NCNA, Independent Sector, or GEO, research presented in NVSQ or the Nonprofit Quarterly, some of NCRP's work, and the slowly emerging industry standard developing out of the Center for Effective Philanthropy's reports - the Grantee Perception Report and the Applicant Perception Report.

What kind of information do we - the public, donors, community members, voters, activists, nonprofit service users, taxpayers - have about grant making foundations organizations - individually and in their 70,000+ totality? We have data from the IRS, reports from the organizations above plus those from the Foundation Center, the Council on Foundations, the Philanthropy Roundtable, Urban Institutee, Capital Research Center, the Association of Small Foundations, National Center for Family Philanthropy, regional and identity-based associations of grantmakers and dozens of foundation affinity groups. There is information from the foundations themselves - via the web, email newsletters, annual reports, and direct engagement. We have media coverage, sites like ActivistCash, blogger opinion and discussion, and studies by municipal governments or regional and state agencies. Foundations are included in web resources such as GuideStar, CharityNavigator (public grantmaking foundations only), and on the finance site of

In fact, we might be reaching a point on the "information available" spectrum where what we need is not more information, but a way to find the right information. One potential analog, from the IT world, would be this site, All-the-analysts, which is intended to provide one-stop-shopping for all the analyst reviews of new IT stuff.

However, I think the reality for philanthropy is we're still in that place where the interest is for more and different kinds of information. The title of Joel Fleishman's 2007 book, The Foundation: A Great American Secret, states it clearly - foundations are not well known nor well understood. We even see foundation-funded efforts to address their collective, presumed low profile. The Philanthropy Awareness Initiative, which aims to broaden understanding of the roles foundations play and the accomplishments they have supported, is one example.

All of the information and information sources noted above share an important characteristic. Somewhere in the mix, foundations are paying some of the costs of making the information available. Are there any sources of information on foundations that are completely free of philanthropic support? If there were, what difference would it make? Does the funding shape the information?

I don't know "the answer" to these questions, though (of course) I have opinions on all of them. The third one, especially, since all one need do is compare the information provided by some of the sources listed above and you can quickly determine the interests of those providing it.

As I was thinking about these issues, I found an analog that caught my attention. Big time.

Imagine if the nonprofit sector went the way of commercial entrepreneurs and starting rating foundations the way entrepreneurs rate venture capitalists - check out According to its founder, the original intent for the site was to help him - a successful entrepreneur - keep track of VC firms. He now argues, in a recent BusinessWeek article, that "...airing the industry's dirty laundry will ultimately improve the efficiency of the funding process as well as relations between financiers and entrepreneurs."

Part of the proposition for TheFunded is that those who fund VC firms - including high net worth individuals, universities, pension plans, and foundations - want to know how these firms treat their applicants and funded companies. Giving voice to the opinions of the VC's entrepreneur partners will help the VC's funding partners make better decisions. This proposition is trickier in philanthropy, since many private foundations only "raise money" once. The analogy holds for community foundations, as well as for those foundations that are started with small endowments and expect (or hope) for more over time.

TheFunded gives us an analog for thinking about the pro and cons of publicly sourced, anonymously provided, non-foundation funded information about foundations. Would such information be good or bad? I think that is the wrong question to ask.

What should we ask about such a resource? Here are some suggestions:
  • What, if anything, would such a source add to the total mix of information available?
  • Would it make foundations more transparent?
  • Would it backfire - and make them less transparent?
  • Is any one source of information going to change the way any one person does anything, thinks anything, or takes action?

I'm not advocating on behalf of or against any of the information sources noted in this post, and I don't claim that the lists or the examples are complete. I'm not planning on running out and starting a foundation-oriented version of TheFunded nor do I know anyone who is (though I do know plenty of people who probably wish one existed.) I am suggesting that we add into the industry-wide discussions of transparency - regarding both foundations and nonprofits - some nuance. Herewith:
  • Transparency about what and for what purpose?
  • Information and data provided by and analyzed by whom and for whom?
  • What other sources of information are there, and how will more or different information add to, distract from, or shift perspective on what is already available?

We have a lot of information available. What do we know and not know? What information do we need and in what form? For what purpose? What do you think transparency looks like?

DISCLOSURE: Some of my writing, some of my work, and some of my volunteer time is spent on issues of knowledge, information, transparency, and giving. I am on the Board of GiveWell and an advisor to The Nonprofit Reporter, have spoken at GEO, COF, CEP, and Independent Sector conferences, worked with ASF, and published in some of the sources noted above. You may check my other affiliations here.

Wednesday, January 16, 2008


My last post included an unexpected forecast. Which is to say I wasn't planning on forecasting anything, but when I sat down to review my notes and thought about what was on my mind - oops, out popped a prediction.

Forecasts and forecasting are everywhere. This is partly "the new year" phenomenon - as a culture we seem to like end-of-year and start-of-year lists. We also seem to like voting on issues. Take this sample:
  • "Should people get paid to donate their organs? Yes 42%, No 58%"
  • "Should government play a role in managing health insurance? Yes 57%, no 43%"
  • "Should public works be operated by private interests? Yes 32%, No 68%"
Where did those questions and answers come from? Some global forecasting organization? A major news magazine? A prediction market website? No, no, and no. They came from The Costco Connection, a monthly advertising supplement/magazine sent to the discount warehouse company's' 10 million+ members.

And there are forecasters on the radio and TV - not just getting the weather wrong, mind you. In this set of observations on the future from Paul Saffo, from the Institute for the Future, he notes that the Vatican is looking to train extra exorcists for the coming year - what do they know that we don't know?

What about philanthropic forecasts? Are there paths through these myriad predictions that may be of use to individual donors, nonprofit organizations, institutional aggregators, and/or large foundations? You can be sure that the endowment managers at The Harvard Management Company and the Vatican Bank (manager for Catholic Church, not including assets of Vatican City), which collectively invest and manage more than $40 billion in liquid assets are watching a certain set of trends (though perhaps not the one on exorcists).

What trends might matter to philanthropists beyond those in charge of managing endowments? What about program officers, evaluation experts, policy and advocacy leaders, and CEOs? Here are some trends I'd point these folks to - please chime in and add your own.
  1. Short-term predictions about the American economy now seem to fall into two camps, we are now in a recession or we will be in one by __ date.
  2. The collapse of the housing market, the increase in foreclosures (which hit working women of color harder than other populations), and the likely effects of this on family and community stability, children's educational prospects, health and health access, and crime.
  3. The unprecedented opportunity represented by the two leading Democratic Party political candidates to change an entrenched national discourse on racism and sexism. And the likelihood that they won't.
  4. The continuing costs in real lives and real dollars of the wars in Iraq and Afghanistan, including the social and more costs of caring for those who return from active duty.
  5. The shift, over the next 10 years, from leading edge Baby Boomer retirement to bulk-of-the-bubble Baby Boomer retirement.
  6. The mass migration of populations across hemispheres and cultures, accelerated by the effects of climate change.
  7. The shifting rates of growth in Islam and Christianity as the world's fastest growing religions, and the potential implications on national, regional and global economics and politics.
  8. Continued Internet-based innovation about information and giving
What are you watching? What matters to the way you think about your giving on a daily, monthly or annual basis? Is your foundation planning to act differently because of any of the trends noted above? For example, Harvard, Yale and others have announced expanded uses of their endowments to address the economic realities of their incoming student bodies - a market which recently peaked in size and demographers predict will begin dropping. Are Harvard and Yale's actions "noblesse largesse" or are they rational acts in the face of several trends coming together - smaller number of potential students (supply), huge amount of money, overwhelming student debt burdens, real belief in power of social class diversity, recognition of national wealth gaps, proactive move to deflect growth in anti-elitism....[add yours here]....

And what about your foundation - what is it doing in light of the trends above (or any others)? Is it making any strategic adjustments due to the external realities of its issues areas? Please let us know if there are trends that matter, how you are adjusting your own or your foundation's giving to those trends, and what else we might be on the look out for.

DISCLOSURE: I graduated from Yale, have taken courses at Harvard, shopped at Costco, been on panels with Paul Saffo and I've been to Vatican City. I was born during the baby boom, though I am no where near retirement.

Monday, January 14, 2008

Patents - the new philanthropic assets

I've written before about patent philanthropy, and we all have Peter Drucker to thank for pointing out that we have been living in a knowledge economy since he coined the term in 1966.

But the real meaning of this is only just beginning to permeate philanthropy. So here's a historical parallel that may draw some attention.

Go back in time with me to America, circa 1913 - John D. Rockefeller, the world's richest man endows the Rockefeller Foundation, the first such institution in the US. The Progressive Era is in full swing, federated forms of philanthropy and new public welfare institutions are spreading across major cities. The 16th Amendment to the US Constitution (allowing an income tax) is ratified. The gap between rich and poor is a political issue. Woodrow Wilson is inaugurated as President, after a shakeup election with a major third party candidate. His election brings the first change in party control of that office in the 20th Century. Labor conditions around the US are garnering attention, spurred by strikes and retaliation in Colorado mines, the creation of the Federal Commission on Industrial Relations, and an investigation into many major industries and industrialists, including John D. Rockefeller. Working conditions in factories, mines, and slaughterhouses are deemed inhumane. What do we see here? Tremendous industrial shifts, regulatory change, a changing public mindset about public good and the role of the state, and philanthropic innovation.

Fast forward to 2007 - what do we see? Let me cut to the chase - a presidential election that is being hailed as "breakthrough," regardless of who wins, with economic upheaval serving as background. There is widespread concern about the widening gap between between rich and poor, political calls for reform in housing, healthcare, and education financing, and philanthropic innovation centered around use of the Internet and global giving, as well as the creation of issue and identity-based community funds. Congress and regulators are reviewing estate taxes, there are widely publicized legal challenges to the income tax, and much ado about patent law. Industries from real estate to recording are in upheaval caused by technological innovation and changes in intellectual property practice. Working conditions around the world and the effects of industry and human activity on the environment are on everyone's minds.

What do we see here? Tremendous industrial shifts, regulatory change, a changing public mindset about public good and the role of the state, and philanthropic innovation.

My point? The external conditions for philanthropic innovation now are similar to the era that gave us both private and community foundations.

In 1913, philanthropic invention focused on the core asset of the day - financial wealth. I'm going to predict that we will see philanthropic innovation in the 21st century doing the same - this time, though, the asset is knowledge. Here's the key event in this "future history" - the creation of the Eco-Patent Commons at the World Business Council for Sustainable Development.

What is it? A nonprofit organization designed to manage patents by major global corporations. The patents will be made available for commercial and noncommercial innovation. All of the patents cover environmentally-friendly "technologies" - from gadget re-use to more sustainable packaging. It represents the tax-beneficial, public-opinion-improving donation of assets by global corporations "to protect the planet." It is being created at a time of regulatory uncertainty for these corporations. It involves the public, private and independent sectors.

Time will tell if I'm on to something. Just as we mark 1913 as a beginning for foundations, I am marking this as the beginning of a new kind of knowledge-based philanthropy.

Thursday, January 10, 2008


You may have seen the story in the Times the other day about BigThink - here it is.

What is BigThink? As the Times put it, its a web site that "...mixes interviews with public intellectuals from a variety of fields, from politics, to law to business, and allows users to engage in debates on issues like global warming and the two-party system. It plans to add new features as it goes along, including a Facebook-like application for social networking..." The founder of the site is cited in the article as seeing BigThink as a potential source of original material for college students doing research.

What are folks on BigThink saying about philanthropy? There's a flash video of Pete Peterson, Senior Chairman of the Blackstone Group, former Federal Reserve Bank member, member of the Nixon Administration, and author, discussing the following proposition, "The rich owe a debt to society." There are places for responses - from you, or me, or anyone. You can easily rate the discussions, link them to your Facebook pages, or bookmark them. It is a bit of "blog of blogs," with initial content and provocations presented in flash video. In this way it reminds me a little bit of the LongBets prediction site, except you're not betting or predicting, just discussing.

Or will we discuss, as compared to rate, vote or predict? What is notable to me on the BigThink site are the easy "ratings", "Agree/Disagree" buttons....Is this because we'd rather simply give something thumbs up or down than discuss it? Is it because we just love to vote? Love to bet - good, bad, be my American Idol? Is it something about us and how we talk to each other, or is it something about this kind of asynchronous media? Will these tools turn a platform for conversation and thinking into a prediction market? Are prediction markets spreading? I loved this story about the lunchtime betting at Google, a series of prediction market opportunities (currency of exchange: Goobles) that turned out to be an undercover economics research project on information flow. Alright, I've wandered away from the topic of BigThink and philanthropy...or have I? The purpose here? Keeping my eye on developments that influence how we give, think and learn about giving, institutionalize or accelerate or improve giving...Is BigThink that? I don't know, but I'm watching. *

So on philanthropy at least, there is not much being said, yet on BigThink, but there could be. Can we get a conversation going? Head on over, agree or disagree, add your thoughts, and check it out. You needn't be a BigThinker to become one - you can offer up your own ideas and get a conversation started that way.

*And I also found a potential first 2008 buzzword in this exploration. Drumroll, please...microgeography. Which feels a lot like last year's opener, hyperlocal.... But I'm not ready to call it 08's first until I start hearing about microgeographies of giving....

DISCLOSURE: I am the executive producer of The Giving Channel on I am not affiliated with BigThink.

Wednesday, January 09, 2008


Here is a new resource on philanthropy and structural inequities - Why is something like this needed? Here's why:

"The amount of money provided by institutional philanthropy directed toward social justice and racial equity is minuscule compared to money provided to education, health, arts, culture and other areas.

For philanthropy to effect more progress, more philanthropic resources devoted specifically to closing gaps in racial equity are needed. ...

Here at home, philanthropy in communities of color is growing at a faster rate than in the dominant community. There is fresh search for old traditions of philanthropy. And more traditional philanthropic organizations are showing interest in aligning both their development and allocation efforts to serve matters of equity and justice."

The website is the result of a project led by Steven Mayer and Effective Communities, LLC. The work was funded by the Ford Foundation.* The guiding questions for the work were two:
  1. Can philanthropy help create greater racial equity and social justice?
  2. If so, what would be benchmarks of progress?
The project and website offer six "pathways to progress" for extant grantmaking organizations that want to advance racial equity and social justice. Often, these goals are held by some insiders, but not all; or, if held by all, are not clearly stated, understood or acted upon. It is to these institutions and their staffs and board members that this work is directed. Here, in preview, are the six pathways:

What can philanthropy do? Previewing the six “pathways to progress," philanthropic organizations can:

"...create or support the kinds of conversations needed to support community leadership for problem-solving.

...shape their own organizational activities to pursue a focus that closes gaps in fields of interest that they care about.

...create momentum to move along good ideas and solutions that hold promise for closing gaps. the kind of network and association development and expansion that can support good solutions. raise resources, and devise ways to deploy them better, in the service of closing gaps and disparities.

...make progress on closing gaps if they keep their eyes on that prize, and make their choices to achieve those ends. "

Anyone who has ever tried to change an existing organization knows how hard it can be. Those who are creating new organizations have a different set of challenges. The JustPhilanthropy site can help in either case - by pointing you to tools and resources that others have used and by providing a guidebook down the different pathways.

DISCLOSURE: I know Steven. I have worked with the Ford Foundation.

Design sustainability in

This post on IF: BOOK discusses the possibility for designing the future of the book with deliberate attention to sustainability. Its not enough to be networked, but to be sustainable. Here is another example of how sustainability is moving into the design of many things - from the Green Skeptic on designing greener gadgets.

This is something we should be thinking about in philanthropy. Designing for future realities, limiting degradability, thinking about the long term from the get go - these seem like good ideas to "design in" to programs, initiatives and strategies. This is similar to some of the building blocks and design elements and methodologies for foundations I have written about before, but the IF: BOOK author (Kim White) said it so much better than I did. As have Bill McDonough, Alex Steffen and others at WorldChanging, Donella Meadows, David Suzuki, or Amory Lovins.

Monday, January 07, 2008

B Corps first year

B Corporations - first year, 82 companies, $65 million marketplace. This impressive start was just announced by Jay Coen Gilbert of B Lab. Congratulations, B Lab and fellow B corporations!

Disclosure: Blueprint Research & Design, Inc. is a founding B Corporation and I have blogged about B Corps here, here, here, here, here, here, here, and here.

Sunday, January 06, 2008

Rising up for a longer view

Denise Caruso's* Re:Framing column in today's New York Times is worth a read - here's the link. She points to a number of recent studies and actions by certain philanthropic foundations and their support organizations that emphasize the importance of long-term, general operating support. The article, and many of those interviewed and cited in the piece, speak to the "costs" of program specific funding. In particular, this passage from Tom Tierney of Bridgespan is worth considering:

“Everyone is managing against the perception that nonprofits are supposed to be low-cost and low-overhead,”.... The only way for nonprofits to increase their working capital is to take on more projects, which in turn keeps increasing the amount of capital they need — a “vicious cycle that perpetually starves them of capacity”.

The article goes on to cite the work of Grantmakers for Effective Organizations, Social Venture Partners International, The Center for Effective Philanthropy, the Edna McConnell Clark Foundation, The Hewlett Foundation, Compasspoint and the Meyer Foundation.* All of this work, and the focus on general operating support, is worthy of note. My only real question is whether or not it adds up to a trend or has enough heft to act as a countervailing force against what Caruso calls the
"... stance that the return on charitable dollars should be tangible and measurable, and should drive capital flow in much the same way that earnings figures do in commerce."
In fairness, Caruso only points to the research and foundations she cites as "... a small and increasingly vocal group of foundation leaders [ ] challenging the benefits of this approach." In other words, she doesn't burden their work with being a trend or countervailing force - I threw that in. Why? Because the question that intrigues me includes that which Caruso is asking and goes up a few thousand feet higher in altitude - what is happening overall in philanthropic capital markets?

Fly up to 35,000 feet with me and the view gets really interesting - there is a lot of experimentation and variation underway in philanthropy right now. As we fly over the "landscape" of funding for public good, we see an increasingly varied and dynamic topography:

From this altitude we can see Caruso's group focused on general operating support, as well as those focused on project-specific metrics. We also spot the various efforts at accountability and transparency, a few on knowledge sharing, and several that are trying out new ways of using technology. And over there - out that window - can you spot the efforts to directly connect small donors with international projects? They're there, just next to the corporate social responsibility movement - over by cause marketers. Just beyond them - out another window, if you will - is the increasingly organized microfinance community. From another window we see the growing range of donor advised funds. Look over there, we can see on the horizon the socially responsible investing movement and as we continue along social entrepreneurs, double/triple bottom line investment companies, and social venture capital firms are coming into view. Wait - over there - way on the horizon - is that the carbon trade movement coming into view?

As we fly along we notice all along the way the interspersed tens of thousands of small foundations, organized around a family legacy or values, working hard to advance the causes they care about and not bothering with all the tumult around them. We also spot banks and trust companies, attorneys and accountants, consulting firms, wealth managers and multi-family offices - all providing philanthropic advising and management services. And, look! Over there! Media companies and magazines that help frame the discussions about philanthropy. Out every window we see the hundreds of millions of individuals who make a daily, weekly or at least annual practice of giving some amount of their time or money to make life a little better for someone else.

And on and on. You get my point (I hope). Philanthropy is not a static thing - it is (perhaps) more dynamic, robust, and diverse than it has ever been. It is global and institutional, local and individual. It is influenced by commercial interests and ageless, religious tenets. It is personal, passionate, and, sometimes, rational. There are organized influences and individualistic drivers. There are common metrics and areas of profound disagreement; active leaders in the field as well as actors who have no interest in being part of a larger field - they are focused like lasers on their own work. Foundations are bound together by legal and regulatory guidelines, but not really much more than that. Some work together, some are actively trying to influence others and share information, and some are not. Foundations are themselves a varied topographical feature on a complicated landscape of philanthropy. Philanthropy is also only one feature on a broader landscape of funding for public good. I think we need to zoom in and look close at these features - it is in this spirit that I highly recommend Caruso's article.

And then we can fly back out for a panoramic view and see this whole, beautifully complicated landscape. When I do so I am reminded of how necessary - and yet small - each piece of the whole really is. I hope as we build expertise in each of the topographical components (foundations, double bottom line investment firms, metrics, etc) we also can find conceptual ecologists or system thinkers, chaos theorists or "bio"-diversity experts who can help us consider the interactions and dynamism, as both characteristics of and influences on the whole. Thinking about the systems helps us to see how each of the pieces, and the interactions between them, really matter. This can help us move the discussion away from "old and new," "them and us," "good and bad." When your analysis focuses on the interactions then the mainstay practices matter as much as the experiments. The failures matter as much as the successes. The edges and the center both matter. And the view is really fascinating.

Of course, just as you think we might be ready to land this flight, we remember where all this private investment for public good fits into yet a larger landscape. The story of which - paradoxes, dangers, warning signs and possibilities - is told quite nicely also in today's Times, in this look at the differences between private and public investments in the city of New Haven, CT.

*FULLEST POSSIBLE (511) DISCLOSURE: I have worked with, in some fashion, almost every individual and organization mentioned in Caruso's article. I have championed Caruso's book as as a "must read" and a critical resource for philanthropy. I have read all of the studies she mentions in her piece and may have even contributed to some of them in some small way, shape, or form. Oh, let me not forget that I've spent time in New Haven and met with some of the folks mentioned in that story also. If I have somehow omitted or mischaracterized an affiliation or attribution, I have done so only in error, not as an attempt to mislead.

Friday, January 04, 2008

Buzzword Survey

A colleague pointed me to the site of the Forum of Regional Associations of Grantmakers. The site hosts a survey widget, asking readers to choose the buzzword that "best captures philanthropy trends in 2007." The buzzwords offered as choices come directly from the list posted on this blog on December 31. That full list was as follows:

10. Philanthropy 2.0
9. B Corporation
8. Endorsement Philanthropy
7. Social Stock Exchanges
6. Embedded Giving
5. Aligned investing
4. Open Philanthropy
3. Microfranchising
2. Microphilanthropy
1. Hyperlocal

As public radio stations often note, "The opinions expressed are not necessarily the opinion of the station or its sponsors." I was not contacted by the Giving Forum, did not suggest or sanction the use of these buzzwords in this way, had no hand in developing the survey widget, and only found it when it was brought to my attention by a colleague. In addition, please note this post that comments on the role and value (if any) of buzzwords and the ideas they attempt to represent.

Thursday, January 03, 2008

Lessons being learned - in near-real time

I'm not trying to be coy, here. I have a real question.

What would you do?

Suppose you agreed with an idea and supported folks who came up with it to try to put their vision into action. You joined a nonprofit board to try to make the idea real. The idea and the organization got some traction, even though the operations and execution of the organization weren't very good. Then some really stupid things were done by those running the organization.[1], [2], [3], [4]. Mea culpas were offered, apologies made. However, the truth is the organization exists in public trust and relies on public faith, good will, and credibility and these have been damaged - fatally in the eyes of some, less so in the eyes of others.

What do you do? Fire the offenders, finish unfinished business, and pull the plug on the entity, hoping that the ideas will take form elsewhere and be better, even successfully, managed? I might call this the "one strike and your out, put faith in the creative destruction of social entreprenuerism, and move on" approach.


Take steps to fix the organization, remediate the mistakes (and those who made them), invest in the slow, painstaking work of rebuilding public trust, credibility, and faith, and see if the idea can not only stick, but can overcome these early, enormous pratfalls? This might be called the "we all make mistakes, an organization is more than a single person, finish what you started and eat humble pie all the way home" approach.

Or doubt there are other approaches. Everyone thoughtful that I have spoken to about this has seen the many sides of the many issues, so there must be other approaches to dealing with this. A friend pointed me to the Whole Foods version of this - which shows that the SEC and FTC have their own views about how to deal (or not) with this.

Suggestions are welcome (Please use comment form. Please do not comment anonymously - at least use a creative pseudonym. Please refrain from name calling, accusations, or language that you would not use with your grandmother or your small child. Management reserves the right to refuse service to patrons who don't move the discussion forward in a productive way.)

I know I am opening myself up to more attacks and vitriol by bringing this up. But, as I've experienced directly in the last few days, there are many people out there who care deeply about key principles of integrity, public trust, fair and respectful discourse, and learning collectively how to navigate the bounds and lines of known publics and anonymous communities, online and offline public trust, and creating transparent and accountable behaviors that also respect people's privacy. I hope to learn something from asking this question - it has real, practical, and immediate application for me. It probably does for you too, if you read this blog.

Full disclosure: I am a board member of GiveWell and The Clear Fund. My other professional affiliations are online here and here.

[4] comments at

Wednesday, January 02, 2008

Efforts to rate charities expand in Israel

I received an email newsletter today from DAI - Donor Associates in Israel, a consulting firm that helps donors make gifts in Israel. You can check out their website at This is the first of their newsletters I've received, and I'm not sure how I got on the mailing list.

The newsletter cites the development of a new initiative. The following is a quote from the newsletter:

"Midot is a new joint initiative of the Meitav Group, a private investment house, and the JDC-Israel that aims to carry out multi-dimensional, professional evaluations of Israeli nonprofit organizations, and to share its ratings and profile with the general public on the Internet, free of charge.

Midot is being established to meet the needs of donors, nonprofit organizations, and the general public, all of whom will benefit from an increase in the quality and quantity of information available on Israel's nonprofit organizations.

Midot's research and development team is busy learning about existing nonprofit evaluation tools currently being used in the US and UK, and plans to distill the best elements of each to develop their own evaluation instruments. Several conclusions to date:

  • Findings will be presented primarily in a quantitative format, with occasional explanation. This enables the same tools to be used for all organizations.
  • Social analysts (like stock analysts in the finance world) will be charged with carrying out the actual grunt work. Midot's evaluation will rely heavily on the analyst's professional assessment.
  • Evaluations will be multi-dimensional, rather than based purely on raw financial data, such as the ratio of program to administrative expenses. An organization's effectiveness cannot be measured by numbers alone.
  • The organizations being evaluated will be heavily involved in the process.

During the course of 2008, Midot plans to carry out several pilot tests, and intends to begin full operations in 2009. Given the depth and intensity of the process, Midot will not be able to cover all of Israel's nonprofit organizations, but nonetheless plans to rate hundreds and perhaps thousands of nonprofits over the next 5-10 years.

How it will work: two social analysts will carry out an in-depth evaluation of a nonprofit organization over a period of 4-6 weeks, during which time they will meet with various stakeholders, observe the programs in the field, and review internal documents. This team will submit its findings for review by Midot's other social analysts. A committee will then rate the organization and share the rating and report with the organization for comments before posting the rating and an executive summary of the findings on the Midot web-site. Interestingly, organizations that don't fare well in the report may be spared the online listing.

The organizations that were rated must update Midot on major changes, and may be placed on a watch-list in certain circumstances. They are also subject to an annual review, which Midot expects to be 20% of the time and effort of the initial evaluation.

Worthy of note: Midot does not consult or advise donors or organizations. Its focus is on rating and evaluating organizations according to multi-dimensional criteria. The end-product is a rating of the specific organization, rather than a comparative ranking to other organizations. The social analysts will be barred from evaluating organizations in which they have a conflict of interest.

Midot is in the process of establishing itself as a Public Benefit Company, and will eventually be able to provide tax deductions to donors who sponsor the evaluation of particular organizations or fields of nonprofit activity."

This note in the newsletter follows an announcement that Guidestar is coming to Israel. It seems there is a burgeoning, public interest in and efforts to reveal more information on the nonprofits in that country. The newsletter cites several recent stories in U.S. papers about similar trends, including several stories that ran in the Wall Street Journal in December.* Israel provides an interesting place to watch for these developments, as it is a small country with robust organized diaspora philanthropy.

*The articles cited in the newsletter, and the newsletter itself, note several organizations with which I am affiliated. I am on the Board of Directors of GiveWell and on the advisory board of the Nonprofit Reporter. A list of my professional and voluntary associations is available here.