Wednesday, January 26, 2011

Mission Insurance

The following idea came to me in an interview with Melinda Penkava of NPR. The story was taped this morning - I'll post a link when it goes on the air.

Here's an idea for a social entrepreneur - mission insurance. Now that we have social businesses, social enterprises, and nonprofits all producing social goods we need some way of making sure that the good gets done. Some type of insurance to keep the profit motive (even if its just break-even financial sustainability) from overwhelming the social mission.

Why do we need this? First, history. The ongoing trials of for-profit higher education in the USA (which I noticed in their paid political advertisement against "job killing regulation" in today's New York Times prefer to call themselves "career colleges") and commercial microfinance in India, Mexico and elsewhere are ripe examples of financial motivations overtaking social mission.

Second, consumer protection - for both donors and customers of nonprofits and social businesses. From the donors' perspective we need something more than metrics and annual reports that cements the organization's commitment to social good. Nonprofits have typically relied on (been given a pass by) their corporate structure and the public accountability of their boards. I'd say both of these are not strong enough. Social businesses, particularly those that meet the standards of a B Corporation, are beginning to document and commit themselves contractually to social good. This is a step toward mission insurance, but the B Corporation* standards are written mostly to protect business owners, then the investors, then the customers. We need something that will work for downstream investors or donors.

And there is nothing available to ensure customers - be they the borrowers from a microfinance organization, the teen employed by a job training company, or the working mom seeking a new credential to better her job prospects - that the services they are getting are being designed and delivered with a measurable, enforceable commitment to bettering lives and communities.

Mission insurance - something that takes the organizational commitment of a B Corp, the public accountability and reporting of nonprofit governance, and anything useful we've learned about social return and social impact - and puts it together to protect the commitment to a long term goal. There you have it, my product idea for the day.**

* Full disclosure: My company, Blueprint Research & Design, is a B Corporation.


Sean Stannard-Stockton said...

This is really interesting Lucy. It seems to me that the idea might work best if you start all the way downstream with beneficiaries. It had never really occurred to me before reading this post that there's no "consumer protection" equivalent for beneficiaries.

We know there are documented examples of nonprofit programs creating harm (for instance it is well documented that the DARE program to "keep kids off drugs" has no positive impact and some evidence suggests that it increases drug use).

In the world of consumers, this would be stopped. If a drug designed to decrease the drug cravings of addicts was found to have no effect and possibly to increase cravings, it would be recalled immediately.

While I think it might be hard to "insure" that a social mission is met (just like it would be hard to "insure" that a for-profit became and stayed profitable), it seems very doable to "insure" to some degree of conviction that social programs meet minimum standards. The meeting of this hurdle would then flow upstream and greatly increase the chance of mission success.


Lucy Bernholz said...

Thanks for writing in. As the marketplace of options for producing social goods gets ever more diverse - social businesses, B Corps, nonprofits, informal networks - the need for ways to distinguish between them becomes ever more important. It's absolutely amazing to me that we don't think about this from the beneficiaries point of view - how do they/we know what to expect from each kind of organization?

For the last century or so, the governance model of nonprofits, along with their structural prohibition against private inurement (benefit to those who create the organizations) have been our primary "insurance policies" in this regard. Not much, but better than nothing. But these standards don't apply in today's structural mosaic. We need something new -


Mirm Kriegel said...

Hi Lucy,

Excellent points you (and Sean) make, and I particularly like the term 'mission insurance,' as it aligns very much with an idea we've been talking about a lot at BBMG - the idea of Company as Cause, and Cause as Company. Which is to say, as sectors continue to converge, it's no longer company + cause, it's company AS cause... cause must be wired into the corporate DNA** (read Tom's shoes).

And, to your point above, it's also Cause as Company. Meaning, philanthropy must continue to think more like companies, integrating more service design and becoming more evaluation-driven. As you've both said, not easy, but today, it's about accountability, showing impact in addition to the cause. In short, it's about the customer (beneficiary) -and the consumer (donor).

**Full-disclosure: BBMG is also a founding member of B-Corp